HomeBusiness DigestBattle over Econet stake in Nigeria

Battle over Econet stake in Nigeria

Godfrey Marawanyika

STRIVE Masiyiwa’s operation in Nigeria, which has ownership in Vee Mobile Networks, faces a challenge from South African mobile giant Vodacom and Britain’s Virgin Group who ha

ve jointly made a bid for a controlling stake in Nigeria’s third-largest mobile operator.

Both Vodacom and Virgin issued a statement saying they intend to launch a joint bid for a controlling shareholding in Vee Mobile.

“Vodacom and Virgin Group confirmed their intention to bring together their extensive expertise in the mobile telephony market and to form a consortium together to undertake a joint bid for a controlling stake in Nigeria’s Vee Mobile,” the companies said in a statement last Thursday.

British business tycoon Richard Branson owns the Virgin Group.

The Virgin Group has operations that range from its Virgin Atlantic Airline, fizzy drinks distributed under the name Virgin Pepsi, to music distributor, Virgin Records.

The Nigerian operation of Econet Wireless Nigeria (EWN), now trading under the name Vee Networks, has been involved in a protracted dispute with Vodacom. The dispute arose last year when Econet Wireless, a founding partner and 5% shareholder in EWN, fought a bid by South Africa’s Vodacom to take over EWN, claiming pre-emptive rights to raise its equity stake.

EWN took the case to the Paris-based Permanent Court of Arbitration (PCA) whose three-member panel last week ruled that it had no jurisdiction to decide over the matter and instead referred it to Nigerian courts.

Vodacom and Virgin did not disclose further details.

But a spokesman for Econet in Johannesburg on Tuesday scoffed at the reported investment in Vee Mobile and told businessdigest that no sale of the company can be made until the arbitration process has been completed.

“In any case,” the spokesperson said, “there is a court injunction that prevents Vee Mobile from considering or offering shares to any shareholder”.

The spokesman said company lawyers had already sent formal notification to directors of Vee Mobile that they would be cited for contempt of court if they attempt to do anything, such as selling, transferring or in any way alienating Econet’s shares that would prejudice its rights in the Nigerian company.

“The formal notification, known as ‘Form 48’, was sent to all directors of Vee Mobile recently following media reports that the company is negotiating with Virgin Mobile and Vodacom South Africa to sell shares in the company,” said the spokesman.

Professor Kasunmu, a Nigeria-based lawyer representing Econet, on Tuesday also confirmed that Justice Shuaib of the Federal High Court in Lagos issued an injunction on January 10 ordering Vee Mobile to refrain from taking any measures that would prejudice the rights of Econet.

“In our view therefore the setting up of a negotiating committee which has been negotiating with Vodacom, as well as holding board meetings to discuss the sale of shares and accepting such offers, if true, is a flagrant contempt of court by the board and these actions could lead to members of the board being imprisoned,” said the Econet spokesman.

Legal experts also told businessdigest that the bid by Vodacom and the Virgin Group couldn’t be finalised until the court makes a ruling, adding that since there was already a court injunction there cannot be any transfer of shares.

The saga between EWN and Vodacom took another twist in June last year when the South African mobile giant cancelled its management contract due to staff problems over corporate governance. Econet Wireless International claimed that Nigerian directors had been involved in corruption, and had no right to sell shares to Vodacom since it was in breach of contract between the two parties.

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