It might be thought that a firm threatened with a R200 billion lawsuit would see its shares plummet on the JSE. But investors in Vodacom Group, which is majority owned by British mobile giant Vodafone, have ignored Alieu Conteh’s threat to sue the South African-based mobile phone operator. By Staff Writer
According to a report by Financial Mail magazine, Vodacom has been slapped with a $14 billion (R200 billion) claim by its partner in the Democratic Republic of Congo, businessman Alieu Conteh.
Conteh is the controlling shareholder of Congolese Wireless Network (CWN), which is a minority shareholder in Vodacom Congo. CWN owns 49% of Vodacom Congo and the rest is held by Vodacom International.
Vodacom shares were trading 2.04% higher at R150.51 by midday on Thursday despite the news that Conteh was threatening to sue.
The South African-based mobile phone operator, which is valued at more than R224 billion, has seen its stock rise more than 10% in the past 90 days and year-to-date by 16%.
Rival MTN was also trading higher on Thursday with the stock up 2.78% at R141.83 by midday.
“We remain optimistic of Vodacom’s capability to deal with Conteh as they have done so in the past. The R200 billion figure is really a thumb suck and we were made aware of the threat by the company during their results presentation. This is no surprise to us,” said a Cape Town-based analyst, who didn’t want to be name.
“The story will not prompt some of us to sell Vodacom shares. I am still bullish on the business.”
In its financial statements, Vodacom says the latest claim seeks to “invalidate a court decision to remove Conteh as statutory manager of CWN as well as the liquidation of Vodacom Congo and its payment of various sums to CWN and Conteh”. The action also includes an “unsubstantiated” claim for $14bn against Vodacom International for its “alleged role in helping to undermine Conteh’s position as former statutory manager”.
Vodacom says Conteh’s claim is “without merit”. Vodacom has not done anything to undermine Conteh’s authority, spokesman Tshepo Ramodibe told Financial Mail.
Ramodibe told the magazine that the group will oppose the action.
South Africa’s largest mobile operator, majority-owned by Britain’s Vodafone, is in a long-running dispute in the DRC with Conteh.
In September 2013 Vodacom won an arbitration process against Conteh.