Vodacom/Econet deal collapses

Godfrey Marawanyika

SOUTH African cellular operator Vodacom has cancelled its management contract with Econet Wireless Nigeria citing problems of corporate governance among its own staff.


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Vodacom also claimed it had no control over Nigerian operations.

On Tuesday, Africa’s largest cellular operator Vodacom’s top three executives resigned on allegations of improper actions in the payment of fees to brokers.


Vodacom has since shot down the allegations, arguing that they pulled out of Nigeria because of poor corporate governance and lack of control over the firm.


The previous management deal saw Vodacom put in its own executives to run Econet Wireless Nigeria, which would have seen the mobile provider eventually making a $250 million bid to buy a 51% stake in the business.


EWI had previously claimed that the Nigerian directors had been involved in corruption, and had no right to sell any shares to Vodacom as that would breach their contract with EWI.


Although there were previous warnings and legal action lodged by EWI to prevent any changes to the operations, Vodacom continued to entice the Nigerians.


EWI spokesperson Kevin Kachidza on Wednesday confirmed that their initial partners Vodacom were no longer involved in operations in Africa’s most populous nation.


“We will continue to monitor the operations and developments in Nigeria and take a very cautious approach to what has happened. We will not say much at the moment but Vodacom is no longer represented in Nigeria,” he said.


“There is still some progress to be made, but we faced serious challenges in Nigeria but we assembled a very strong legal team and prayed everyday for us not to be pushed out of Nigeria.”


Kachidza’s comments come in the wake of their legal challenge. They control 5% of the Nigerian company and have instigated legal action to prevent Vodacom from taking over, claiming a pre-emptive right to buy any of the Nigerian shares put up for sale.


Already in Nigeria another South African mobile operator MTN is currently operating in Africa’s most populous nation.


Last year MTN managed to post huge profits from its operations in that country.


Kachidza said no decision had been taken by EWI on who its new partners would be in Nigeria.


“So far no decision has been taken on who are new partners would be as we are still assessing the situation.” he said.


EWI victory comes against the backdrop of the company’s international growing stature in which it recently scooped an international tender to operate in Papua New Guinea.