TELECOMS

Vodacom Congo Dispute Nearing End, International Chief Says

Vodacom Group Ltd., the phone company with most South African customers, is close to resolving a dispute that has blocked investment in its Democratic Republic of Congo unit for the last two years.

“We’re making good progress and getting closer to a solution,” Johan Dennelind, Vodacom’s head of international operations, said yesterday in an interview at the group’s Johannesburg headquarters. Vodacom is 65 percent owned by Newbury, England-based Vodafone Group Plc.

Vodacom has been at odds with local minority partner, Congolese Wireless Network SPRL, since at least early 2010, following a plan to inject $484 million into the business, Vodacom Congo SPRL. CWN has said the recapitalization would dilute its 49 percent share because its shareholders don’t have the money to support their half. Vodacom said last year it had agreed with CWN to “explore options” for the unit after disagreements over the funding and operational structure.

Vodacom Congo had 4.8 million subscribers at the end of September, Vodacom said on Nov. 7. It is the third-largest operator in the country, which has over 71 million people and a mobile penetration rate of 17 percent, according to the U.S. Central Intelligence Agency’s World Factbook.

“We’re having constructive discussions with our partners on the Vodacom Congo board,” said Dennelind. , adding that the parties are “nearing completion.”

The South African operator has said it won’t invest further in the Congo unit until the conflict is solved, and Chief Executive Officer Pieter Uys said in May last year Vodacom may sell its 51 percent stake to end the struggle. The parties have appointed London-based NM Rothschild & Sons Ltd. to advise on the options. Vodacom last week named Ivan Dittrich as Chief Financial Officer from about July 1.

The Congo unit hasn’t reported a profit since Vodacom bought a stake in 2001, while the potential for expansion exists as the country’s mobile penetration rate is 17 percent. The group’s international operations, which include the Congo unit, reported an operating loss of 267 million rand in the six months ending Sept. 30. Tanzania is Vodacom’s second-biggest market, where it owns a 65 percent stake in the local unit which had 10.2 million customers at the end of September.

Source: Bloomberg

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