Vodacom's future in the Democratic Republic of Congo (DRC), as far as its subsidiary Vodacom Congo goes, has still not been agreed upon.
The JSE-listed mobile operator is still in discussions with its Vodacom Congo partner, Congolese Wireless Networks (CWN), regarding funding disputes, according to executive head of corporate communications for the Vodacom Group Richard Boorman.
The operator is not sharing any specifics on the progress of the negotiations at this stage.
“We continue to hold discussions with our partners in the DRC. I can't confirm any specific information on the status of these discussions, nor speculate on any potential outcomes,” notes Boorman.
Failed attempts
In a statement published in the middle of last year, Vodacom said it was in discussions with CWN that could result in changes either to the corporate structure of the business, or the financial make-up.
It seems the earlier discussions had failed.
“Although Vodacom has continued to constructively engage with 49% shareholder CWN, these discussions have thus far proven unsuccessful,” says the operator.
It adds: “Vodacom will defend any legal action in the DRC, while continuing to seek an amicable resolution.”
Partnership dispute
The need for these discussions came about when CWN made threats of legal action against the majority stakeholder in Vodacom Congo.
“It is just a funding question. Vodacom loaned the business money and there was interest paid on that and now this bizarre situation has emerged,” explains Boorman.
In a statement released by CWN, the company said Vodacom forced its DRC operation to pay up to $180 million to satisfy loan agreements with “uncommercial terms and conditions”, making it impossible for the company to make any profit.
Vodacom says CWN is disputing terms of a funding agreement, which was approved by all shareholders, including CWN.
“We have been entirely open in our dealings with CWN. Having explicitly approved the terms of the funding, CWN cannot now claim ignorance of these terms and we refute any suggestion that Vodacom has unduly benefitted from the finance agreements,” says chief officer of corporate affairs of the Vodacom Group Bob Collymore.
He feels this is a move on the part of CWN to try and gain more investment from Vodacom.
“We are single-handedly supplying 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,” says Collymore.
The operator, which owns 51% of Vodacom DRC, has decided to stop any further investment in the company while “relations with our minority shareholder (CWN) are combative and dysfunctional”.
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