/ 31 May 2004

Vodacom pulls plug on Nigerian deal

Africa’s leading mobile phone operator Vodacom said on Monday it was terminating a management pact with its Nigerian partner barely two months into a five-year agreement, and dropping plans to invest $200-million (R1, 3-billion) in it.

On April 1, Vodacom signed a five-year pact to manage Econet Wireless Nigeria Limited (EWN), the second largest mobile operation in the telecoms-starved West African country, home to 130-million people.

”It is with regret that I must inform you that the Vodacom Group Board resolved at its 27th May 2004 board meeting that it can no longer pursue the transaction envisaged with EWN,” said a letter in the Nigerian press.

”It is also resolved to terminate the current management agreement which has been in place since 1 April 2004, by not later than 6 June 2004,” added the statement, signed by Allan Knott-Craig, Vodacom’s chief executive officer.

The statement said the directors of both companies would meet this week in London to ”discuss the exit and transition arrangements”.

The letter did not give any reason for the abrupt termination of the contract, but the Nigerian daily ThisDay reported allegations that Vodacom had objected to the payment of hefty and allegedly corrupt ”brokerage fees” to Nigerian go-between companies which had solicited state government investment.

Following the management agreement two months ago, Econet changed its name to Vee Networks Limited under the brand name Vodacom Nigeria.

The South African operator took a controlling share in the company with a promise to inject about $200-million in equity investment and an operating loan. The money was also meant to upgrade and expand EWN’s networks.

Vodacom’s Willem Swart, formerly managing director of Vodacom Congo, was named chief executive officer to replace Nigeria’s Boye Olusanya.

Vodacom, which operates in South Africa, Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique, has 11-million customers, while Econet has little more than one-million Nigerian subscribers.

Econet is one of four digital mobile firms licensed to operate in Nigeria. – Sapa-AFP