By Tawanda Chihota
Telkom, which owns 50% of Vodacom, has issued a statement confirming that Vodacom and Virgin have formed a consortium to bid for Vmobile, though no financial details were offered.
South Africa’s leading mobile operator Vodacom is partnering with the UK’s Virgin Group, which owns mobile virtual network operator Virgin Mobile, to bid for a controlling stake in Nigeria’s third largest mobile operator Vmobile. Both Vodacom and Virgin Mobile have made independent approaches to acquire a controlling stake in Vmobile, with Vodacom having actually penned a deal in 2004 that subsequently went sour later that year.
Telkom, which owns 50% of Vodacom, has issued a statement confirming that Vodacom and Virgin have formed a consortium to bid for Vmobile, though no financial details were offered. Virgin has also been placed in talks with operators in other developing markets including, Mexico, India and China.
Late last year, sources close to Vmobile stated that the operator was virtually guaranteed a strategic partner before the end of this year. "Vmobile is fully-funded at this point, so it's not like the operator is desperate for money," a source commented in December last year. "The operator has vendors offering financing and I think its choice of strategic investor will be based on the party bringing more to the deal than just money," the source added.
An impending ruling from the Nigerian arbitration tribunal over the rights of founding shareholder Econet Wireless to a 33% participation in the equity of Vmobile may complicate any acquisition of the Nigerian operator. Econet claims to have a pre-emptive right to increase its stake in Vmobile from 5% at the time the network was launched in 2001, to 33%. Econet also has a claim against Vodacom and Vmobile’s Nigerian shareholders for holding discussions and concluding an acquisition deal last year without its participation or approval.
Vodacom initially took over management of Vmobile, which had previously been called Econet Wireless Nigeria, from Econet International and was preparing to assume a 51% equity share in the operator before corporate governance concerns scuppered the deal and led to Vodacom’s subsequent withdrawal from the country. Vmobile counted 2.8 million subscribers at the end of March 2005, a number that has since risen to beyond 3 million.