Vodacom reaffirms commitment to DRC operation

1 Oct 2012

South Africa’s Vodacom Group no longer plans to exit the Democratic Republic of Congo (DRC) and instead is seeking to resolve the longstanding dispute with its local associates and capitalise on the fast-growing market. The company’s new chief executive Shameel Joosub told Reuters: ‘We are working with the local partner to resolve the issues. We are confident the issues are resolvable’. The local partner in question is Congolese Wireless Network (CWN), which holds a 49% stake in the cellco. CWN accused Vodacom of charging excessive interest and fees on the loans, and demanded that the South African company pay back some USD166 million. In March 2010 it was announced that the two shareholders had lodged arbitration proceedings with the International Chamber of Commerce (ICC) in Brussels. In December 2010 investment banking firm NM Rothschild was appointed to explore commercial options, including a sale, on behalf of both shareholders of Vodacom Congo. Vodacom’s woes increased earlier this year, when former consultant Moto Mabanga demanded a USD21 million ‘success fee’ dating back to 2008, although that issue has faded into the background following the Vodacom Group’s legal intervention in June. Joosub was speaking to reporters for the first time since taking over from Pieter Uys as the company’s chief executive at the start of this month.

Elsewhere, Joosub reignited speculation that Vodacom is planning to expand its operational footprint, commenting: ‘We are more confident about more expansion opportunities. We do have an appetite to go, more than previously’. In May this year Joosub’s predecessor, former CEO Uys, revealed that the company was looking to make a series of acquisitions in the USD100 million range. At that time Mr Uys noted that Vodacom intended to focus on countries that offer a stable political environment, have densely populated cities and offer room for growth. As such, the CEO pinpointed Angola, Ethiopia and Uganda as likely targets.