Mobile operator Vodacom has hinted it may exit its operation in the Democratic Republic of Congo (DRC) if the dispute with a shareholder is not resolved by the end of the year.
The mobile operator has been at loggerheads with Congolese Wireless Networks (CWN) regarding a funding agreement in place between the shareholders.
Speaking at the operator's quarterly financial results presentation today, Vodacom CEO Pieter Uys noted that the operation is still running. However, the company will have a board meeting soon and would then head into arbitration at the International Trade Commission court, he explained.
He noted that, parallel to this process, Vodacom will look at all possible options and engage with shareholders to discuss a way forward. “By the end of this year, we will know where we are in the Congo.”
Allegations fly
The dispute stems from a funding agreement between the shareholders of the DRC operation. CWN says Vodacom International has plundered Vodacom Congo of capital and accused the company of fraud.
The Congolese company 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 lashed out at the accusations, saying CWN has made it impossible to find an amicable arrangement.
Vodacom maintains 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 noted earlier this year.
Exit strategy
This is the first time that the mobile operator has indicated that it is considering exiting the operation. Earlier this year, Vodacom highlighted its intention to keep its hands on the business.
“Vodacom firmly believes in the potential of the business in the DRC and believes the interests of Vodacom Congo's employees, its customers and the DRC as a whole are of paramount importance,” said chief officer of corporate affairs Bob Collymore at the time.
“We stand ready to fund further expansion and are hopeful that the arbitration process will bring a positive result,” he added.
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