Mergers, Acquisitions and Financial Results

Econet’s battle with the shareholders of Econet Wireless Nigeria and Vodacom has more twists and turns than a race in Monte Carlo. This week there were three significant developments:

1. A South African High Court last weekend barred founder of Econet Wireless International (EWI) Strive Masiyiwa and two others from interfering in the affairs of Vodacom Group over the latter’s interest in Econet Wireless Nigeria Limited (EWN). The two companies barred along with Mr. Masiyiwa are Econet Wireless Limited and Econet Wireless International (EWI). The restraint order made last Friday followed a libel suit filed against Mr. Masiyiwa and EWI by Econet Wireless Nigeria. EWN had asked the court for an order restraining Mr. Masiyiwa and the two from any further defamatory communication with Vodacom, Vodaphone, Telcom, Venfin and the media against it and its directors. All those named are barred from making any allegations that Vodacom Group (pty) Limited, its shareholders, Telkom SA Limited, Vodafone Group Limited and SBG Communications Inc or any of their subsidiaries, any member of the media or the public at large that the applicant (Econet Wireless Nigeria) or its officials, or its shareholders, were or are in any manner involved in bribery and/or corruption,"

2. Meanwhile the Nigerian judge who failed to address speedily a clash between shareholders in Econet Wireless Nigeria has been told to step aside to allow international arbitrators to take over. The move will lead to a more rapid resolution of the damaging dispute that is jeopardising plans by SA’s largest cellular network operator, Vodacom, to enter the country by taking a majority stake in the cash-strapped Nigerian operator. On Monday, Econet Wireless International won a partial victory when The Hague’s International Bureau of the Permanent Court of Arbitration agreed that the chief judge of the Federal High Court of Nigeria was taking too long to appoint arbitrators to investigate the clash. The court ruled that the Nigerian judge had "failed or neglected to appoint" arbitrators to hear the matter within 60 days of the initial complaint being laid. The Nigerian judge must now step aside and the International Court of Arbitration in Paris will instead be given the power to appoint a three-member judicial panel to hear the dispute.

3. Econet Wireless Nigeria Limited has de-registered its former founding partner, Econet Wireless Limited, from the list of shareholders of the company. In a letter addressed to the companylasr Monday and signed by its chairman, Oba Otudeko, EwN stated that EWL’s name was entered into the register of members of EWN in the first instance without sufficient cause. The letter titled "Rectification of Register of Members" stated, "this is to inform you that at its meeting held on 13th November 2003, the Board examined the Register of Members of EWN and after careful deliberation and examination of all relevant papers it was discovered that the name of your company was entered in the Register of Members of EWN without sufficient cause."

"We are by this letter, advising your company to cease and desist from parading itself as a member or shareholder of EWN. Kindly return to us immediately the share certificate erroneously issued to your company for cancellation.

EWN had in an affidavit deposed by Tunde Oye-wole, the General Manager, Legal Services of the company in support of the company’s suit against Masiyiwa in a South African court, stated that it was initially intended that Econet Wireless Limited, a company where Masiyiwa has controlling interest, would be allotted five percent shares in the company’s equity.

Consequent upon this, EWL had always been referred to as a minority shareholder of EWN. The refusal of EWL to pay for the shares has therefore meant that it was never a shareholder in the real sense in the first instance.According to the affidavit, "the first respondent (Strive Masiyiwa) has failed and/or refused and/or neglected to pay for such shares and is thus, in substance, not a shareholder of the applicant".

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