Vodacom says it could face a lawsuit in the DRC after its minority partner, Congo Wireless Networks (CWN), threatened to take the South African operator to court over an escalating funding row.
CWN, which owns 49% of Vodacom DRC, is reportedly…
Vodacom says it could face a lawsuit in the DRC after its minority partner, Congo Wireless Networks (CWN), threatened to take the South African operator to court over an escalating funding row.
CWN, which owns 49% of Vodacom DRC, is reportedly considering going to court after accusing Vodacom of failing to meet funding commitments.
Vodacom denies the claims, retorting instead that it has been the sole investor in Vodacom DRC since its launch in 2002.
The issue centres around a US$350m loan that Vodacom has issued to Vodacom DRC. CWN claims Vodacom DRC is not liable to repay interests on the loan, while Vodacom says the agreement was that Vodacom DRC is due to repay related interests based on market rates.
It is understood that the issue has been escalating over the past year.
Vodacom has strong interest in defending its position in the DRC. Despite being the group’s poorest financial performer in 2008, the Congolese operator represents Vodacom’s second largest international market by customers after Tanzania. It ended March 2009 with 4.2 million users, 27% up from a year before.
Revenue topped R2,928m (US$399m), or roughly 5% of group revenue, while operating profit declined by 44% to R204m (US$28m). Capex rose 5.3% to R693m (US$95m).
“We are single-handedly supplying funding to Vodacom Congo at commercial terms that were agreed by CWN’s directors,” Bob Collymore, chief officer of corporate affairs, said in a statement.
“Any intended litigation on this issue is entirely without merit and a contrived attempt to force Vodacom to disproportionately fund further investment.”