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| Econet seeks $3.1-bn damages from Bharti |
| BS Reporter / New Delhi/ Lagos Feb 23, 2012, 00:01 IST |
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Econet Wireless is seeking at least $3.1 billion in damages from Bharti Airtel in a dispute over ownership of its subsidiary Airtel Nigeria, according to a suit filed on Wednesday.
The move follows a Nigerian court ruling on January 30 that Bharti Airtel's ownership of its subsidiary Airtel Nigeria is “null and void” because co-founder and five per cent shareholder Econet was not consulted on the transfer.
South Africa-based Econet Wireless is disputing the Indian company’s ownership of one of its top Africa operations.
Bharti said on February 8 that its stake in its Nigerian unit was “completely safe” and that the world’s fifth-biggest mobile phone carrier by subscribers had appealed against the verdict. “The claim for damages and equitable compensation against the applicant and some of the respondents might be in excess of $3 billion,” the document filed to the court said.
“The above estimated damages might also be in addition to a claim for $100 million received by the applicant as fees for the management of VNL (Vee Networks Limited, a former name of Airtel) for a period of six years which sum should have accrued.”
Bharti Airtel inherited the legal case as part of a $9-billion acquisition of Zain’s Africa operations in 2010, including 65 per cent of Zain Nigeria.
The basis of Econet’s claim is that its five per cent stake was unfairly cancelled when Zain took control, so any decision made since then without it, including the transfer to Bharti, is void. The Nigerian court upheld the claim.
Nigeria contributes about 9.5 per cent to Bharti’s consolidated operational profits, the company says.
Econet disputed the buyout of Airtel’s stake from Zain Nigeria in 2010 because its right of first refusal over the stake was denied, in a dispute that had been on since 2003, when the same assets were first sold to Vee Networks.
Bharti said in a statement, “We are surprised to see this statement as we have no notice or details of any such action. However, we note that it contains grossly spurious and misleading statements.”
“The circa five per cent held to be owned by Econet Wireless in Airtel Nigeria in the recent judgment have not been cancelled but have been set aside since 2006, pending final resolution of the ongoing litigation. The partial award has also not determined any damages. Bharti has appealed both the recent judgment and the partial final award and expects a hearing shortly. We have full faith in the Nigerian legal system,” it said.
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