Vodacom CEO Pieter Uys has reportedly said this week, during a presentation of the company’s financial results this week, that the process to resolve a long running funding dispute in the Democratic Republic of Congo (DRC) has been slower than expected but is ‘on track’. Uys said the company plans to invest ZAR7.7 billion (USD1.2 billion) into the network this year. Despite the dispute, Vodacom says it believes that Vodacom Congo has the potential to grow and is hopeful that the arbitration will bring positive results. The dispute is currently before an international court in Brussels.
Vodacom Congo is a 51/49 joint-venture with Congolese Wireless Network (CWN). The pair fell out over a USD484 million capital injection by the Vodacom Group into the Congolese company, a move which the South African company maintains will dilute CWN’s stake. It maintains that the original agreement between the two parties included a clause stating that any shareholder unable to meet capital calls to raise funds could be diluted either through the sale of share to the other, or to a third party. However, for capital calls to succeed, both parties are required to agree to contribute cash. In the midst of the dispute, CWN proposed a liquidation or sell-off to a third party, which Vodacom Congo is rejecting. CWN has also accused Vodacom of fraud and abuse of trust, specifically relating to a loan that allegedly resulted in CWN incurring inflated interest and fees. CWN then demanded that Vodacom Group pay back more than USD166 million in interest. Vodacom Group, however, insists it provided more than USD340 million to the joint venture at commercial rates agreed to by CWN.