Relations between the Vodacom Group and minority shareholders in its subsidiary in the Democratic Republic of Congo (DRC) appear to have broken down irretrievably, casting fresh doubt on the structure and future of the operation.

Vodacom says it will initiate arbitration proceedings under International Chamber of Commerce rules after the shareholders “failed to reach agreement on a number of issues, including capital restructuring that would support the continued growth of the business”.

The JSE-listed cellphone group says it has provided all the funding for Vodacom DRC at commercial rates that were “explicitly agreed to” by minority shareholder, Congolese Wireless Network (CWN).

TechCentral broke the news in January that relations between Vodacom and CWN had soured, putting the Congolese joint venture in jeopardy. CWN, which is headed by businessman Alieu Conteh, owns 49% of Vodacom DRC; the remainder is held by Vodacom through a subsidiary based in Mauritius.

The dispute has placed a question mark over whether Vodacom DRC can continue operating in its current form given the fractured nature of the relationship between the shareholders.

CWN has accused Vodacom of repatriating profits from the joint venture, money it believes should have stayed in the DRC.

Vodacom’s relationship with Conteh goes back to 2001 when the SA group acquired 51% of his then-fledgling mobile operation in the DRC.

But now relations appear to have broken down completely, with Vodacom saying it will seek immediate arbitration.

In a statement, Vodacom says it “firmly believes in the potential of the business in the DRC and that the interests of Vodacom Congo’s employees, its customers and the DRC as a whole are of paramount importance. We stand ready to fund further expansion and are hopeful that the arbitration process will bring a positive result.” — Staff reporter, TechCentral

More to follow on Thursday…