Vodafone is facing a funding dispute with Congo Wireless Networks (CWN), its joint venture partner in Congo.
The two firms have been at loggerheads for some time with CWN, which owns 49% of Vodacom DRC, demanding more than US$200m in damages from…
Vodafone is facing a funding dispute with Congo Wireless Networks (CWN), its joint venture partner in Congo.
The two firms have been at loggerheads for some time with CWN, which owns 49% of Vodacom DRC, demanding more than US$200m in damages from Vodafone-owned Vodacom over an alleged breach of funding commitments.
Now Vodacom DRC is looking to sell a stake to raise US$484m, although according to Bloomberg, CWN believes that this would dilute its stake against its wishes.
Shareholders are reportedly set to meet in Johannesburg on April 7 to discuss the deal.
Vodacom owns 51% of Vodacom DRC, which is in need of fresh funds to propel its expansion. Vodacom will reportedly propose to CWN that the JV’s share capital is raised through the issue of new shares but CWN would be unlikely to be able to afford its own participation in the recapitalization, thus weakening its shareholding.
Vodacom DRC ended 2008 as Vodacom’s worst financial performer.
The operator’s 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), while the group’s capex since launch amounts to roughly US$680m.
However, it represents Vodacom’s second largest international market by customers after Tanzania, and the country’s near lack of fixed-line network is helping mobile take-up to grow quickly. The operator had 4.2 million users in March 2009, up 27% from a year before.