Vodacom is waiting for an outcome in the arbitration process that started a month ago against shareholders in its operation in the Democratic Republic of Congo (DRC).
The company instigated the process under International Chamber of Commerce arbitration rules, in Brussels, early last month, after relations between Vodacom and another shareholder, Congolese Wireless Networks (CWN), hit boiling point.
“The arbitration process is still under way,” says Vodacom spokesman, Richard Boorman.
The two have been at loggerheads for years, and the South African operator hoped the new process would help resolve the troubles at its DRC operation. Vodacom owns 51% of Vodacom DRC, with CWN holding the remainder. The company officially made its commercial debut in 2002.
Financial fisticuff
The dispute stems from the funding agreement between the shareholders. CWN says Vodacom International has plundered Vodacom Congo of capital and accuses the company of fraud.
The Congolese operation has also accused Vodacom of forcing its DRC operation to pay up to $180 million to satisfy loan agreements with “uncommercial terms and conditions”. In January, CWN threatened to take the matter to the courts in Kinshasa.
Vodacom has lashed out at the accusations, saying CWN has made it impossible to find an amicable arrangement.
The South African business says it has single-handedly supplied the funding to Vodacom Congo at commercial terms that were agreed by CWN's directors. “Any intended litigation on this issue is entirely without merit and a contrived attempt to force Vodacom to disproportionately fund further investment,” the company said earlier this year.
Holding on
Despite speculation that the DRC business is on its last legs, Vodacom appears to be making every effort to hold onto Vodacom DRC.
The company's trouble in the DRC couldn't come at a more inopportune time, since the global economic crisis impacted heavily on returns the company gained in the African country. It is unlikely the company will show any better returns at Vodacom's annual results presentation next week.
“Vodacom firmly believes in the potential of the business in the DRC and believes that the interests of Vodacom Congo's employees, its customers and the DRC as a whole are of paramount importance,” says chief officer of corporate affairs, Bob Collymore.
“We stand ready to fund further expansion and are hopeful that the arbitration process will bring a positive result,” he notes.
Vodacom says its Congolese investment connects more than 3.5 million consumers and businesses, and employs 6 000 people.
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