Vodacom’s troubled relationship with the controlling shareholder of its minority partner in the Democratic Republic of Congo (DRC) is once again emerging as a thorn in the telecommunications group’s side.
Bloomberg published a report on Wednesday stating that Alieu Conteh, the largest shareholder in Vodacom’s DRC partner Congolese Wireless Network (CWN), is suing it for US$14bn, or almost R200bn. That’s about 40% of Congo’s estimated 2015 GDP. The figure is almost three times the size of the $5,1bn fine imposed on rival MTN by the Nigerian Communications Commission.
The Bloomberg report put Vodacom’s share price under some pressure late on Monday, although the group is quick to point out that the information had already been disclosed more than a week ago in notes alongside its interim results for the period ended 30 September 2015.
“The proceedings seek to invalidate a court decision to remove Conteh as statutory manager of CWN as well as the liquidation of Vodacom Congo and its payment of various sums to CWN and Conteh,” Vodacom said in its disclosure.
“The action also includes an unsubstantiated claim for $14bn against [Vodacom International] for its alleged role in helping to undermine Conteh’s position as former statutory manager. The group’s view is that Conteh’s claim is without merit.”
Vodacom closed the session at R147,50/share, down from about the R150/share level it was trading at before Bloomberg published its report on the lawsuit.
It’s not the first run-in Vodacom has had with Conteh, a Gambian-born US national.
In 2010, CWN, led by Conteh, accused Vodacom of fraud, swindling, abuse of trust and usury, among other charges. At the time, CWN wanted Vodacom to cough up more than $200m it claimed the latter had unlawfully taken out of the DRC business through various means.
CWN holds 49% of Vodacom DRC, with Vodacom Group subsidiary, the Mauritius-based Vodacom International, controlling the rest. — © 2015 NewsCentral Media