Vodacom hits snag in congo

VODACOM'S foray into central Africa could be derailed as it faces a lawsuit from its local partners in the Democratic Republic of Congo.

Yesterday Vodacom said it was in discussions with its minority shareholder in its DRC operation, Congolese Wireless Networks (CWN), to resolve a long-running disagreement over its shareholders' agreement.

CWN also hopes to use a court ruling to force Vodacom to invest more money in the business. Vodacom Congo, which began operations in 2002, is 51percent owned by Vodacom, while CWN owns 49percent. At the time Vodacom bought into the local operator's licence.

Since then it said it had invested over R5billion in rolling out network infrastructure and expanding operations.

CWN, however, has grown increasingly unhappy with Vodacom's handling of profits, which it says has constantly been used to reimburse the initial investment rather than being paid out to shareholders.

Bob Collymore, Vodacom's chief officer for corporate affairs, said: "We have been entirely open in our dealings with CWN and have acted in good faith to ensure the viability and growth of Vodacom Congo.

"Having explicitly approved the terms of the funding, CWN cannot now claim ignorance of these terms and we refute any suggestion that Vodacom has unduly benefitted from the finance agreements."

Vodacom Congo has seen its average revenue per user fall from R65 to R39 in a year.