Vodacom`s attempt to enter the lucrative Nigerian telecoms market, through the purchase of $150 million of equity in Econet Wireless Nigeria (EWN), faces a legal challenge from Econet Wireless International (EWI), which claims it has prior rights as an existing shareholder.
Strive Masiyiwa, CEO of EWI, has filed an application against Vodacom South Africa in the Nigerian Federal High Court, alleging that the cellular giant has engaged in actions to "induce a breach of contract".
"EWI, as existing shareholders, has pre-emptive rights to take up the additional equity in EWN, and our offer was initially accepted by the board of EWN, after which we were given a 60-day exclusivity period to complete the deal," says Masiyiwa.
"Despite this, Vodacom - after being made aware of the potential deal through a member of the EWN board - registered an expression of interest, even after I had warned Andrew Mthembu (Vodacom`s deputy CEO) that we had pre-emptive rights."
He says EWI met with Vodacom to explain the irregularity of the offer, providing the organisation with 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.
Asked whether his funders are prepared to continue backing him now that there is a court action to be dealt with first, Masiyiwa says his funders are just as unhappy as EWI about the situation.
Masiyiwa claims that success against Vodacom will see EWI receive financial compensation based on the company`s losses due to delays, profit loss and damage to its brand.
Vodacom`s only comment on the issue was that it is a challenge that needs to be fought in court; it is not a trial that should be conducted by media.
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