DRC debacle: Vodacom responds with statement

Vodacom issued a media statement on Wednesday following TechCentral’s revelations on Tuesday in which we exposed mounting tensions between the SA-based cellular group and its partner in its Democratic Republic of Congo subsidiary, Congolese Wireless Network.

The entire, unedited text of Vodacom’s statement follows:

Vodacom Group (“Vodacom”) has been in discussions with its minority shareholder in the DRC that could affect the relationship with this shareholder. Although Vodacom has continued to constructively engage with 49% shareholder Congolese Wireless Networks (“CWN”), these discussions have thus far proven unsuccessful.  This is despite CWN having explicitly approved the terms of funding agreements that are now being disputed.

Vodacom Congo, which commenced operations in 2002, is 51% owned by Vodacom.  Vodacom’s extensive management and technical expertise was and continues to be a key component of the development of Vodacom Congo.   In the absence of alternative funding sources, Vodacom is the sole provider of capital to this operation that now reaches millions of Congolese customers.

The funding agreements for Vodacom Congo, which clearly state the terms of the funding, were unanimously approved by the company’s directors including those appointed by CWN.  CWN has always been free to seek alternative funding.  Despite this fact, CWN’s primary dispute with Vodacom relates to these funding agreements, and CWN has threatened to take this matter to court in the DRC to force Vodacom to invest significant further sums in the business.

Speaking on behalf of Vodacom Group, Bob Collymore, Chief Officer 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. We are single-handedly supplying funding to Vodacom Congo at commercial terms that were agreed by CWN’s directors.  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.  Any intended litigation on this issue is entirely without merit and a contrived attempt to force Vodacom to disproportionately fund further investment.

“Vodacom remains firmly focused on developing the Vodacom Congo business to its full potential, but we cannot justify further investment while relations with our minority shareholder are combative and dysfunctional.  Vodacom finds the actions of CWN counterproductive and not in the best interests of either Vodacom Congo or the country as a whole.”

Vodacom will defend any legal action in the DRC while continuing to seek an amicable resolution.

For the year ended March 2009, Vodacom Congo accounted for 5,3% of Vodacom Group’s revenue.

See also: Congo partner accuses Vodacom of fraud

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