In response to Econet Wireless International`s (EWI) allegations that Vodacom SA has engaged in actions to "induce a breach of contract", CEO Alan Knott-Craig says the cellular giant originally had no intention of participating in the Nigerian cellular industry.
Vodacom, which did not want to comment on the story when it was initially run on ITWeb yesterday, has since decided to tell its side of the story.
"Until Vodacom were invited by Econet Wireless Nigeria (EWN) earlier this year to acquire equity in EWN, Vodacom had never intended to enter the Nigerian industry," says Knott-Craig.
"We responded to the invitation by the EWN board by making an offer subject to a successful financial and legal due diligence. This offer was accepted by the EWN board and shareholders."
According to EWI`s CEO, Strive Masiyiwa, his company, as an existing shareholder, had pre-emptive rights to take up the additional $150 million worth of equity in EWN and on top of that, the company`s offer was initially accepted by the EWN board.
"Despite this, Vodacom - after being made aware of the sale of this equity, thanks to a member of the EWN board - registered an expression of interest, even after I had warned Andrew Mthembu (Vodacom`s CEO) that we had pre-emptive rights," says Masiyiwa.
"EWI met with Vodacom in good faith to explain the irregularity of their offer, even going so far as to provide the organisation with full details of EWI`s contractual agreement with the EWN board.
"Vodacom came back to the EWN board with an offer anyway. This offer was identical - dollar for dollar - to the one we provided to Vodacom during the abovementioned meeting," he says.
Knott-Craig says that as far as he is aware, the primary reason for EWN inviting Vodacom to make an offer and for accepting such an offer was a need on its part to acquire more operational and marketing support, as well as financial support, to compete more effectively in the Nigerian market.
"To date, we are not and have not been involved in any legal action with any party whatsoever regarding this proposed transaction in Nigeria," says Knott-Craig.
He says Vodacom is engaged in the necessary financial and legal due diligence before the transaction can proceed, although the due diligence work is not as yet complete.
"Should this due diligence reveal any financial or legal obstacle in pursuing the proposed transaction, then clearly such a transaction cannot take place," states Knott-Craig.
Masiyiwa believes Vodacom`s move constitutes an illegal practice, as EWI already has a binding agreement with the EWN board, and that the company is proceeding in a manner that it probably wouldn`t have done had this happened in SA.
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