Vodacom's Congo partner feels ‘abused'

The latest salvo by Congolese Wireless Networks (CWN) chairman Alieu Conteh raises the prospect of another image bruising battle for Vodacom nearly six years after it burnt its fingers trying to enter the lucrative Nigerian market.

That misadventure claimed the scalp of former deputy CEO Andrew Mthembu and directors Robert Pasley and Willem Swart. Conteh, also chairman of Vodacom Congo, told Business Day Vodacom had three choices — defend itself in court, agree to negotiate or have the joint venture sold.

“The solution is to talk. CWN shareholders are always open to solve this matter out of court. If we don't come (to an) agreement, the best (is) to sell the company to the next operator,” Conteh said.

The simmering funding and shareholder dispute includes failed behind-the scenes talks by the two partners — leading to a meeting in Paris more than two years ago to amend the original joint-venture agreement signed in October 2001.

The amendments included how funding for Vodacom Congo would be raised. It also included an agreement that any shareholder unable to meet capital calls to raise funds could either be diluted through the sale of shares to the other, or to a third party acceptable to the other.

The dispute is believed to have now reached the president's office in the Congo, and at one stage, such was the tension between the two partners that Vodacom expatriate staff were concerned about their security in the country. Vodacom insists CWN has not assisted in the funding of the network, and said last week that it was no longer willing to continue spending money without the support of its partner.

Conteh separately issued a statement on Friday in which he spoke of allegedly being “abused and exploited” by Vodacom, and said he had filed a lawsuit accusing Vodacom of “persistently abusing” its position as the lead partner in the joint venture launched in May 2002.

He said that Vodacom had financed the network with expensive loans, which had resulted in overpayment to Vodacom International of up to $180m. “The loans have ostensibly been provided by Standard Bank SA, although Vodacom International has refused to provide CWN or Vodacom Congo with any copies of the documentation,” he said.

Asked to comment on claims by Vodacom that CWN had asked that the group continue funding the network, Conteh said he had not “asked for a cent” but that the group should return some of the fees under dispute.

On Friday, Vodacom said it would not add to a statement issued early last week in which it pledged to defend its shareholders in court if forced to do so.

Source: Business Day

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