Vodacom has won protracted international arbitration proceedings in its long-running dispute with Congolese Wireless Network (CWN), the minority shareholder in its operation in the Democratic Republic of the Congo (DRC).
Relations between the two companies fell apart four years ago, with CWN, which holds 49% of Vodacom in the DRC, accusing Vodacom Group of unlawfully repatriating profits instead of reinvesting the funds in the troubled central African country.
In 2010, Vodacom instituted arbitration proceedings under International Chamber of Commerce rules. Former Vodacom Group CEO Pieter Uys warned at the time that if the dispute could not be resolved adequately, Vodacom could pull out of the DRC.
Vodacom obtained a “favourable outcome” in the final hearings in the arbitration proceedings with CWN, the telecommunications group said in notes alongside its interim results for the six months ended 30 September 2013. “At this stage, the group is still pursuing a settlement with that shareholder.”
Vodacom Group CEO Shameel Joosub says the operator is “sitting down with our local shareholders and trying to find a resolution to the issues”.
Though he declines to comment further on those negotiations, he says Vodacom would “like to purchase a bigger stake” in the DRC operation, where it currently holds 51% of the equity.
“We are definitely committed to staying [in the DRC] and to working with our current shareholders as well,” Joosub says. There are “no big issues” between the shareholders, he says, adding that relations with CWN are “very cordial”.
“But,” he adds, “our intention to increase our shareholding still stands.”
The DRC operation has performed well in the past year, growing subscriber numbers by almost a third to 8,8m. However, churn — calculated by dividing the annualised number of disconnections during the period by the average monthly customers during the period — rose to 88,2%.
Average revenue per user was also low at R37/month, the lowest of all of Vodacom’s operations. — (c) 2013 NewsCentral Media