Mergers, Acquisitions and Financial Results

The Chairman of Econet Wireless Nigeria (EWN), Mr. Oba Otudeko, has said that he harbours no ambition to increase his shareholding in the company in a letter to This Day. Otudeko’s statement came in the wake of widelky reported attempts by him along with others, to put a fresh offer on the table to secure the financially handicapped company ownership from interested external parties like Vodacom and Orascom who had been mentioned in the Econet deal.

In a letter to THISDAY dated August 31, 2003, Otudeko said, "Definitely I am not part of any joint bid for the company’s shares." He added that his interest as the Chairman, Director and founding shareholder of EWN is "to initiate, promote and associate with measures that would optimize its standing in the market place, assist it to offer quality services to consumers and finally grow its value optimally."

Otudeko insisted, "I am happy with my current shareholding in the company". He said that he took the modest position since the company’s inception by choice, as he was privileged as the lead promoter of EWN to acquire more shares at the time.

Otudeko said he had the opportunity to be part of a revolution, an initiative that impacts positively on the lifestyle and comfort of fellow Nigerians; and that is the kind of opportunity that he would embrace any day.

He admitted that he was well aware and happy with the fact that "the current equity raising process, when finally successful, will dilute my, along with existing shareholders’ equity, in the company."

Otudeko said further that he was concerned that the capital raising process in Econet, discussed in the press, could have a negative impact in the whole process.

He wrote, "Whilst it is true that Econet Wireless Nigeria Limited is raising additional capital to deepen its funding and competitive edge in an industry like telecommunications known to be very capital intensive; the company does not intend the issue discussed in the public domain. EWN has been in the process of capital raising since the year 2001 as the Nigerian market requirements for telephony had significant unsatisfied demand arising from historical requirements for telephone services in the nation.

"EWN’s capital raising efforts involved approaches to local and international institutions and some of them are publicly quoted companies whose share prices sometimes respond rather feverishly to news concerning their companies. EWN’s image is also understandably sensitive to published news about its activities, which is why it is helpful that the company is careful about news disseminated or published about it."

He said earlier reports on the process have had its negative ripples on the company. It is recalled that due to financial constraints hindering its operations, EWN had recently opened its doors wide for prospective investors interested in acquiring equity in the company. THISDAY had last week reported the interest of Vodacom in the second-placed Nigerian GSM operator with 34 percent of the market.

The CEO of the company, Mr. Zachary Wazara, while stating that EMN was not in any kind of financial distress, had confirmed that the company is welcoming interested parties to take up stake in the company. He had said, "I can confirm now that EWN, given the size of our market will continue to look for money in form of loans, equity, etc."

He added that the shareholders had the right to raise capital to improve on the operations of the business but where the shareholders could not exercise that right; the company would invite others to come and look. EWN, Wazara maintained, was receptive to investors who have the needed funds to invest into Econet’s operations.

Otudeko’s letter yesterday coincided with the date, Monday September 1, when Orascom of Egypt was supposed to have submitted its bid for the telecom firm.

All Africa