Malawi Mobile Limited loses US$66.8m case

28 April 2017

Mergers, Acquisitions and Financial Results

Malawi's third mobile phone operator, Malawi Mobile Limited (MML) has lost a case involving US$66.8 million against the Malawian government in the Common Market for Eastern and Southern Africa (Comesa) court of justice.

MML sued the Malawian government and the country's telecom sector regulator, the Malawi Communications Regulatory Authority (MACRA) for compensation over the cancellation of its operating license in 2005.

MACRA revoked the license on grounds that the company had failed to fulfil its obligations under the license agreement entered between the parties in 2002.

Under the agreement, MML was required to roll out public radio mobile services in the country for a period of 15 years.

Following the cancellation of the license, MML took MACRA to court demanding compensation.

In April 2012, the Malawian High Court Commercial Division ruled in favour of MML and awarded the company damages of US$66.8 million for loss of business and "unlawful" cancellation of the mobile license agreement between MML and MACRA.

But the Malawian government and regulator appealed the ruling in the Supreme Court of Malawi arguing that the company had no basis to demand such money.

After the hearing of the appeal, the Supreme Court overturned the ruling by the High Court.

MML then decided to take the matter to the Comesa Court of Justice still claiming compensation.

The Malawian government was represented in the Comesa court by Attorney General Kalekeni Kaphale.

"Three years after being given the contract, MML failed to set up any infrastructure in Malawi worthy demanding such claim. The company failed to prove its financial capability by failing to roll out the network as stipulated in the license condition," Kaphale argued.

The panel of Judges, led by Justice Lombe Chibesakunda of Zambia, has ruled that the cancellation of the license agreement was not in breach of the Comesa Treaty and the court therefore had no jurisdiction in the matter.

"The alleged breach of contract by Macra are based solely on Malawi domestic law and not Comesa Treaty related and are not unlawful within the meaning of Comesa Treaty," ruled the judges sitting in Lusaka.

Following the ruling, Kaphale said he was happy that the decision has gone in favour of the Malawian government.

MML is owned by three investors including Finanz Capital Management Private Limited of South Africa with 55% shares and Finanz Holdings Limited of Mauritius with 35% shares.

Source: ITWeb Africa