Vodacom, SA's largest operator, sees the Democratic Republic of Congo (DRC) as a big opportunity and it wants to remain there and grow.
Recently-appointed Vodacom CEO Shameel Aziz-Joosub says the company has just launched 3G in the African country, although the group is still embroiled in a lengthy court case that affects its stake in the country.
Vodacom Congo made its commercial debut in 2002 and has around 5.6 million subscribers. Vodacom has a 51% stake in the entity.
However, the South African-based operator has been involved in a dispute over a funding agreement with co-shareholder Congolese Wireless Networks (CWN). Vodacom hired NM Rothschild to explore options for the DRC business, which included a potential exit from the country, at the end of 2010.
In addition to the funding quarrel, Vodacom has faced several challenges from former business consultant Moto Mabanga, of Namemco Energy. Mabanga took Vodacom to court, in 2010, over its alleged lack of payment for work he did. The appeal court ordered Vodacom to pay out $21 million earlier this year.
The company's failure to pay the fine subsequently led to the court ordering that its stake be seized and sold via auction. The forced sale was subsequently suspended, although the argument over the pay-out continues.
Aziz-Joosub says the company is still busy with the court case, but he does not anticipate Vodacom having to pay out the amount, which is equivalent to about R174 million, as the group has a strong case.
Looking north
Aziz-Joosub says Vodacom is more confident in terms of expansion in Africa. He says it comes down to the right market and structure. The cellular company has operations in Tanzania, the DRC, Lesotho and Mozambique.
Vodacom's African operations were problematic for a while, but have been turned around, says Aziz-Joosub. In the year to March, for the first time since it expanded outside of SA, in 2000, its international operations contributed to cash flow.
Aziz-Joosub says there are still opportunities for expansion on the continent and the group is looking at a couple of options.
Once expansion becomes more real, Vodacom will provide further comment, says Aziz-Joosub. He says the value of the deal depends on the size and the opportunity.
The operator's international operations and its data drive accounted for 87% of its revenue gains in the year to March. Vodacom bolstered revenue 7.8%, to R58 billion, ahead of its expected low single-digit gains.
Vodacom's international operations accounted for about 40% of the company's 48 million subscribers at year-end. However, the company's entities outside of SA only accounted for R10 billion of its total revenue - some 17.24%.
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