Vodacom lawsuit would be last resort, partner says

Congolese Wireless Networks will follow through with a lawsuit against partner Vodacom if the South African company refuses to ease fee requirements in their Congo joint venture contract.

“Courts are the last resort,” CWN chairperson Alieu Conteh told Reuters in a telephone interview on Thursday. “There is a window for negotiations.”

CWN, which owns a 49% stake in joint venture Vodacom Congo, has threatened to take Vodacom to court for at least $180-million in a long-running dispute over fees — including those to guarantee loans — which it says have brought the partnership to the edge of bankruptcy.

Vodacom, which owns the remaining 51% of Vodacom Congo, said on Wednesday it would defend itself against any legal action in the central African nation and that it would look for an amicable solution to the dispute.

“CWN has instructed their lawyer to look for a legal solution as negotiations with Vodacom from 2005 until now have led to nowhere,” Conteh said.

“What CWN is asking is, we sit around the table, renegotiate the joint venture agreement and stop paying those fees that are crippling Vodacom Congo. This is a system to suck money from the company. It is a system they have in third-world countries.”

Conteh said Vodacom, owned by British telecommunications company Vodafone Group, had taken about $284-million in funding fees from the Vodacom Congo as part of the joint-venture partnership contract agreed in 2002.

“We never refused what we signed. We signed it in good faith. But when we realised it was not good, we asked to renegotiate. There is no contract in this world which is not negotiable,” he said.

A Vodacom spokesperson said on Wednesday the company would defend itself against any legal action.

“Any intended litigation on this issue is entirely without merit and a contrived attempt to force Vodacom to disproportionately fund further investment,” said Bob Collymore, Vodacom’s chief officer for corporate affairs.

Collymore said that, in the absence of alternative funding sources, Vodacom was the sole provider of capital to the Congo operation.

“Having explicitly approved the terms of the funding, CWN cannot now claim ignorance of these terms and we refute any suggestion that Vodacom has unduly benefitted from the finance agreements,” he said, adding the company remained firmly focused on developing its Congo business to full potential.

The joint-venture company, which began in 2002, accounted for 5,3% of Vodacom’s total revenue of R55,2-billion for the year to end March 2009. – Reuters

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