HomeBusiness DigestEconet sues Bharti Airtel for US$3,1b

Econet sues Bharti Airtel for US$3,1b

Airtel, a leading global telecommunications company with operations in 20 countries across Asia and Africa, including the Channel Islands, and 200 million customers across its operations, offers mobile voice and data services, fixed line, high speed broadband, turnkey telecom solutions for enterprises and national and international long distance services to different carriers, among other services.

After the lawsuit, Airtel’s shares, valued at US$26 billion, plunged by 4% yesterday. However, the Indian conglomerate said it had no notice or details of any action by EWI seeking damages, but termed claims “grossly untrue and misleading”.

Airtel, controlled by Indian telecoms mogul and billionaire Sunil Mittal and also nearly a third owned by Southeast Asia’s top phone company SingTel.
The lawsuit follows a Nigerian court ruling on January 30 that Bharti Airtel’s ownership of its subsidiary Airtel Nigeria is “null and void” because co-founder and 5%shareholder EWI was not consulted on the transfer.

EWI had been locked in legal battles in the Nigerian courts since 2003. The Nigerian court ordered that EWI was still a shareholder of Airtel Nigeria Ltd and had 5% of the issued shares of the company. It ordered Airtel to reinstate the shareholding.

The court also ordered that all actions and resolutions taken by the company were null and void. This included decisions to sell shares, issue shares and also transfer shares to third parties.

Econet Wireless International Group CEO Craig Fitzgerald confirmed the latest court action in a telephone interview but would not disclose further details, preferring instead communications from his media department.

However, he said the issue had been long drawn and prior to last month’s ruling by a Nigerian court an international tribunal had also ruled in his company’s favour and there was to be another hearing on the quantum of damages to his company to determine equitable compensation.

EWI’s latest move followed Airtel’s claim on February 8 that its stake in its Nigerian unit was “completely safe” and that it had appealed against the verdict.

“The claim for damages and equitable compensation against the Applicant and some of the Respondents might be in excess of US$3 billion,” EWI’s document filed to the court said.

“The above estimated damages might also be in addition to a claim for US$100 million received by the Applicant as fees for management of VNL (Vee Networks Ltd, a former name for Airtel) for a period of six years which sum should have accrued.”

Airtel inherited the legal case as part of a US$9 billion acquisition of Zain’s Africa operations in 2010, including 65% of Zain Nigeria.
EWI disputed the buyout of Airtel’s stake from Zain Nigeria in 2010 because its right of first refusal over the stake was denied, in a dispute that had been ongoing since 2003, when the same assets were first sold to Vee Networks.

The basis of EWI’s claim is that its 5% stake was unfairly cancelled when Zain took control. So any decision made since then without it, including the transfer to Airtel, is void.

The Nigerian court upheld that claim. Nigeria contributes about 9,5% to Airtel’sconsolidated operational profits, the company says.

 

–– Reuters/Staff writer.

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