Business / Companies
Econet sues Indian mobile phone giants for $3.1 billion
23 Feb 2012 at 04:44hrs | Views
Econet Wireless is seeking at least $3.1 billion in damages from Bharti Airtel in a dispute over ownership of Airtel Nigeria, according to a suit Econet said it had filed on Wednesday.
Bharti acquired the African operations of Kuwaiti company Zain in 2010, including 65 percent of Zain Nigeria, renamed Airtel Nigeria, but a Nigerian court ruled on January 30 that its ownership of the unit was "null and void" because co-founder and 5 percent shareholder Econet had not been consulted on the transfer.
Econet claims its stake was unfairly cancelled when Zain took control in 2005, so any decision made since then without it, including the transfer to Bharti from Zain, is void. The Nigerian court upheld that claim.
Bharti, the world's fifth-biggest mobile phone carrier by subscribers, said on February 8 that its stake in the Nigerian unit was "completely safe" and it had appealed against the verdict.
A Bharti spokesman said the company had not been informed of any lawsuit.
"Econet has yet to put forward its claim for damages to the arbitral tribunal," he said in a statement emailed to Reuters.
The document Econet said it had filed to court stated: "The claim for damages and equitable compensation against the applicant and some of the respondents might be in excess of $3 billion."
"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's spokesman said the Econet stake had not been cancelled but had been set aside pending final resolution of litigation on the matter.
Nigeria contributes about 9.5 percent to Bharti's consolidated operational profits, the company says.
Bharti acquired the African operations of Kuwaiti company Zain in 2010, including 65 percent of Zain Nigeria, renamed Airtel Nigeria, but a Nigerian court ruled on January 30 that its ownership of the unit was "null and void" because co-founder and 5 percent shareholder Econet had not been consulted on the transfer.
Econet claims its stake was unfairly cancelled when Zain took control in 2005, so any decision made since then without it, including the transfer to Bharti from Zain, is void. The Nigerian court upheld that claim.
Bharti, the world's fifth-biggest mobile phone carrier by subscribers, said on February 8 that its stake in the Nigerian unit was "completely safe" and it had appealed against the verdict.
A Bharti spokesman said the company had not been informed of any lawsuit.
The document Econet said it had filed to court stated: "The claim for damages and equitable compensation against the applicant and some of the respondents might be in excess of $3 billion."
"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's spokesman said the Econet stake had not been cancelled but had been set aside pending final resolution of litigation on the matter.
Nigeria contributes about 9.5 percent to Bharti's consolidated operational profits, the company says.
Source - Reuters
