ECONET Wireless on Wednesday announced it had raised US$1,5 billion for the acquisition of a key stake in Nigeria’s third largest cellular network operator, V Mobile, the same day Celtel International said it was acquiring a 65% stake in the Nigerian ope
The move put Econet’s bid in the lurch, forcing chief executive officer Strive Masiyiwa to approach the courts in what could turn into a protracted legal battle for control of V Mobile.
Kuwaiti telecom services provider Mobile Telecommunications Co (MTC) said last month its Africa-based subsidiary Celtel had signed a conditional deal to buy 65% of Nigeria’s V Mobile for just over US$1 billion.
Econet, a 5% shareholders in V Mobile, immediately claimed pre-emptive rights, which it was granted, resulting in the South Africa-based firm dispatching a team of experts to conduct a due diligence exercise before an offer could be made to selling shareholders.
Wednesday’s announcement by Celtel executives, who alleged Econet had lost its pre-emptive rights after failing to exercise its rights on time, therefore came as a surprise to Econet, whose CEO said the emerging pan-African telecommunications giant had “successfully raised US$1,5 billion in less than 30 days to buy all V Mobile shares” on offer.
Econet, which has over the past three years fought battles for control of V Mobile, formerly Econet Wireless Nigeria, accused Celtel of colluding with its Nigerian partners to stop the group from taking over the company.
Masiyiwa said Econet had raised US$960 million in loans from syndicated banks and $546 million from equity funds but the selling shareholders in V Mobile had refused to provide transaction documents required for completion, including details of the escrow accounts for payment of the money.
Econet was forced to seek legal redress in a UK court to have the documents released. However, the UK court, which initially issued an injunction to stop the transaction, later discharged the injunction and referred the matter to a Nigerian court because of a technicality over jurisdiction.
Econet has now made an urgent application to the Nigerian courts for an order to force the Nigerian shareholders to release the documents required to complete the purchase.
Businessdigest understands that the dispute over Econet’s take-over of V Mobile had become a sticking point in Econet’s plans for a London listing, initially earmarked for last month.
Sources indicated that Econet had postponed the listing plans until the V Mobile issue had been completely dealt with.
Earlier this year, businessdigest reported that deep-pocketed suitors were scrambling for equity in Econet, which recently took over a controlling stake in Malawi’s leading cellular firm, Telekom Networks Malawi (TNM) under a US$24,5 million deal.
Econet’s London listing is expected to raise between US$400 million and US$500 million.
Some fund managers are understood to be planning an entry into the group by bankrolling in part Econet’s acquisition of the 65% stake in V Mobile, which would place its shareholding in the Nigerian company at 70%.
Masiyiwa said he was confident his company would win the court battle.
“If they (Celtel) buy disputed shares, they must know that they are holding them in trust, as those are our shares,” said Masiyiwa. — Staff Writer.