Econet Wireless Group triumphs in Nigeria

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Strive Masiyiwa

Strive Masiyiwa, Econet Wireless Group Chairman (Image credit: CNBC Business: cnbcmagazine.com)

According to a press release posted on the Econet Wireless website today, the Federal High Court of Nigeria handed down judgment in favour of Econet last week in the dispute between the company and Bharti Airtel Nigeria. The matter stems from shareholding disputes in 2003 and until now that Econet has been fighting, and until now the company had failed to get any favorable outcome from the courts.

In 2003 Econet attempted to resist a takeover bid by Vodacom of Econet Wireless Nigeria (EWN) in which it owned 5%. The sale to Vodacom however went through but Vodacom pulled out after citing irregularities in the takeover process. EWN was renamed V-Mobile and eventually a 65% stake sold to Celtel, a division of Zain in 2006. Econet disputed the sale arguing that its pre-emption rights had been breached. Econet pursued the matter in the Nigerian courts in a bid to overturn the sale. In 2010, Zain sold its African mobile operations including Nigeria to Bharti Airtel for $10.7 billion. Again, Econet sought to overturn this sale.

So far, it looks Econet has succeeded this time and the company wishes to rewind matters and right all the wrongs since the dispute started. At least that’s what the press release suggests.

Strive Masiyiwa, the Econet Wireless Group Chairman, is quoted in the release: “It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company”

Bharti Airtel on the other hand has sought to reassure shareholders in a statement:

In light of the judgment by the Federal High Court of Nigeria regarding Econet Wireless Limited’s (EWL) claim to the ownership of 5% equity in Airtel Networks Limited (Airtel Nigeria), an appeal against the said judgment has been filed by Airtel Nigeria. The Company abides by and has full confidence in the law of the land, and believes the Appeal Court will determine the appeal on its merits.

Here’s is the full release by Econet Wireless:

On the 24th January 2012, in the Federal High Court of Nigeria, the Honorable Justice Shuaib, handed down judgment in the matter between Econet Wireless Ltd (‘EWL’) vs. Bharti Airtel Nigeria Limited, suit No FHC/KD/39/2008 (Formerly FHC/L/172/2004)
The summary of the judgment is as follows:

  1. Econet Wireless Ltd, an international company, domiciled in the United Kingdom, is a shareholder of Bharti Airtel Nigeria Limited and holds 5% of the issued shares of the company. The court ordered Airtel to reinstate the shareholding of EWL.
  2. The court ordered that all actions, and resolutions taken by the company, since October 2003, at which EWL was entitled to be notified, and to participate in, as a shareholder, but was prohibited, are null and void. This includes decisions to sell shares, issue shares, and also transfer shares to third parties.
  3. The court also ordered that the name change from Econet Wireless Nigeria Limited, effected in 2003, was irregular, and must be reversed forthwith.
  4.     The Corporate Affairs Commission (CAC), has been ordered to cancel any certificate previously issued for the change of the name of the company and restore the name of the company to Econet Wireless Nigeria Limited.

As a result of the judgment by the Honorable Justice Shuaib, Econet Wireless Limited through its lawyers has now written to the company, with the following requests:

  • Immediately reissue shares in the company to Econet to reinstate its 5% interest.
  • Provide Econet full access to information relating particularly to board decisions and shareholder resolutions in accordance with the Companies Act, the shareholders agreement between the parties and in pursuance of the orders of the Federal High Court of Nigeria.

Econet Wireless intends to review the decisions taken by the board and other shareholders to ascertain which actions are in violation of the order of the High Court.

Commenting on the decision, Econet Wireless Group Chairman – Mr Strive Masiyiwa said:

“It is universally accepted throughout the world, that when shares in a company are allotted and share certificates issued, as confirmation of ownership, this is sacrosanct.

“In October 2003, Econet Wireless Ltd received a letter from the chairman of the company – Mr Oba Otudeko, in which he advised that at a board meeting directors had decided that Econet Wireless was no longer a shareholder, Econet’s share certificate had been cancelled, and Econet’s name removed from the shareholder register. The motive for this unprecedented action was the circumvention of Econet Wireless’ rights as a shareholder in order to facilitate the sale of shares, first to Celtel International, and later to Bharti Airtel.

“As a result of these actions, Econet Wireless was left with no option but to seek redress through the courts. An application was filed in the Nigerian Federal High Court in October 2003, more than eight years ago. Since then, every legal avenue to delay the process was pursued by the defendants  through their lawyers, in order to  frustrate Econet Wireless.

“I am very disappointed that whilst it was clear to Celtel, Zain and Bharti-Airtel that Econet Wireless was a shareholder, they still chose to pursue a path, in which the end justified the means. It is clear even to those with the most basic understanding of company law that the board of a company has no power in any jurisdiction to simply cancel the shares of a shareholder but their desire to own the company was so great that they were prepared to overlook the facts and ignore our rights

“The substance of this ruling, which was known by Celtel and then Bharti, was a matter of record in the legal documents of the company. It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company.

We have made it clear to the company, that as a shareholder, we would like to ensure that all actions that must be taken to comply with the court order are undertaken in such a way that there is minimal disruption to the ongoing operations of the company.

“The board of Econet Wireless and I remain willing to sit down with Bharti-Airtel, to review the best way forward for all parties. In the meantime, we have a fiduciary responsibility to take all of the necessary steps to vigorously protect the interests of our shareholders.”

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  • Itai Hillary Zimwara
  • Gilbert Makore

    relentless….

  • Larry Kwirirayi

    Great news

  • Zvaiwana Ngwarati

    The long arm of the law will finally catch up with Airtel.This is a good lesson to big organisations that aggressive takeovers dont pay if not done according to the law.

  • Rozviking

    this is good news for the great zimbabwean empire..

  • Prosper Chikomo

    While people sing praises, are they really aware that the
    Econet Wireless Limited that is invested in Nigeria is actually registered in
    the U.K. and not in Zimbabwe just like Mutumwa Mawere’s Africa Resources
    Limited which owns Shabanie Mashaba Mines is based in the British Virgin
    Islands? Like in the Masiyiwa case, UK courts also found nothing wrong with
    Mawere business.

    And then when I say folks must invest cleverly and
    through, and in countries that will protect their investments etc., some folks here claim I
    speak fairy tales.

    If you have nothing to protect and a tiny business you have
    no hope of ever growing into a monster, it is OK and I understand where you
    will be coming from.

    There is nothing to
    stop you from using your foreign company to invest in Zimbabwe or any country.
    Because the Econet in question is based in the U.K., Econet was able to put
    pressure and even approach the U.K. legal system to put pressure on Vodacom
    (then part owned by Vodaphone U.K.) to pull out. I look forward to a day when
    savvy Zimbabwean techpreneurs will just be as savvy with doing business
    worldwide.

  • Chanyani

    The tragedy of thid saga is that a Africa company ( i am hoping that the Sudanes/Arababic Mo Ibrahim – yes that is the guy who had promised to fund african entreprenuers and then decided he would get more exposure and praise funding politicians -  who started this considers himself africa) potched another african company and then sold it to an arabic company. This is the tragedy.

  • Prosper Chikomo

    Chanyani, you  are right with your first 10 words. As for “arabic tribalism”/xenophobia I do not this there is any Arabic conspiracy because Vodacom from South Africa which the one that started the whole mess is not Arabic.

    However, it clearly illustrates the point i always make on Techzim which has got me one deletion so far (in the FB comment days) and some angry comments.

    I understand business more than tech. and when i tell folks to weave multinationals that protect their business interests, here i get criticism, especially when i say start a company in the US and use it for investments anywhere. Some ‘intelligent” people, when i mention the U.S., even go to the extent of telling me of the “plight” of the Red Indian.

    Vodaphone UK left because it knew what it was doing was unethical and shareholders were not pleased.

    Celtel, because it cared nothing about the ethical grounds and property rights issues, and we are talking of a Sudanese company here, went on to grab what Vodaphone had left.

    Bharti, in a bid to get big just grabbed the loot. remember, at one time Bharti wanted to buy MTN, but the SA government refused stating that MTN is the pride of Africans – if MTN goes to India, then what will Africa have to be proud of?

    Bharti has now filed an appeal to the ruling and since the Econet decision was not at Supreme court level.

    Nigeria is world famous for corruption and scams and you can only cross your fingers that Econet will will. you cannot appeal a supreme court decision. Unfortunately Econet Wireless Ltd (UK) is so small and irrelevant that the British would use their armed forces to defend it or to effect a regime change, unlike if it was BP.

    Remember, it haz taken Econet 9 years to get this judgemento!

  • Prosper Chikomo

    Corrections: Should read:

    - Chanyani, you  are right with your first 10 words. As for “Arabic
    tribalism”/xenophobia I do not think there is any Arabic conspiracy
    because Vodacom from South Africa which is the one that started the whole
    mess is not Arabic.

    - Nigeria is world famous for corruption and scams and you can only cross
    your fingers that Econet will win. You cannot appeal a supreme court
    decision. Unfortunately Econet Wireless Ltd (UK) is so small and
    irrelevant that the British would never use their armed forces to defend it or
    to effect a regime change to protect British corporate interests, unlike if it was BP.

  • Chanyani

    African solidarity is complex. never dismiss those who have passion for it as xenophobic! I think such an approach borders on a brand of liberalism that does not help our cause. i have written a piece on Afro/Arab/funding in African Business and won an award for it. So yes I have business and tech kowledge and I am not being xenophobic! I earn most of my money outside Zimbabwe and know the rules and rewards of working in expat territories. You seem to think that knocking nigeria is ok but touching arabs is xenophobic! I object to that.

  • Prosper Chikomo

    I disagree with your assessment of my post, and many people
    who read your post about the “Sudanese” will come to the same conclusion as me,
    unless you have not clearly articulated what you wanted to say, since you are
    the one who knows what you wanted to say.

    You say – “You seem to think that knocking nigeria is ok but
    touching arabs is xenophobic! I object to that.

    There you show selective interpretation of what I said.

    If any country has the military, diplomatic, U.N., or even
    economic muscle to defend its strategic economic interests abroad or in any
    country, I believe it should use it. It does not matter whether that country is
    the U.K., United States, China, Iran, Zimbabwe, Nigeria, South Africa or even
    Togo. There is nothing xenophobic about that.

    Recently the US passed laws that prohibit and make some
    Chinese imports expensive. This makes U.S. products more competitive and
    certainly the law favours US businesses. There is nothing wrong with that. The
    US complains that the Chinese currency is undervalued. But China is exercising
    its own powers over its own currency and also power over US debt to keep its
    currency where it is. There is nothing wrong with using your power to maximum
    effect.

    If the Gulf Oil spill had been caused by a Iranian company
    and not BP, you can expect that Iranian company would have been put under US
    administration – NATIONALISED. In BP’s case, the UK used its powers (and
    relationship power) to force to US to be more lenient towards BP.

    You talk about the “Sudanese” and a Arabic conspiracy, which
    I strongly feel is a “anti-Arab” xenophobic sentiment. If you had just said Mo
    Ibrahim it would have been better.

    Anyway, I will take it that I misunderstood your comment and
    so I will not go any further with this.

  • Chanyani

    Sudan has major Arab/Africa issues! Infact the whole issue of Arab-Afica-slavery is avoided by most liberals. I had I chance glipse of an interview of a Southern Sudan general after they had just been declared an independed country. He said a lot of things including something like ” …. this is just the first step. The next one is to consolidate and then drive the Arabs out of north Sudan. They do not belong here, they abused black people and took their land. Africans need to be honest enough to face this past ghost of slave masters and know where all colonizers belong. Our short memory stops with the Europeans. If you understand that, you would also understand why in my view, the Ibrahim company would have been less inclided to canibalise what is fast becoming a black africa success story. If we can’t defend our microsofts who will!

  • Mukanya

    Bharti yaka dziya moto webhava

  • chikwanha

    sure the end justify the means