BackCourt challenges Bharti’s ownership of Airtel Nigeria
Court challenges Bharti’s ownership of Airtel Nigeria
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Lagos: A Nigerian court has ruled that Bharti Airtel’s ownership of its subsidiary Airtel Nigeria is “null and void" because co-founder and 5% shareholder Econet Wireless was not consulted on the transfer, according to a judgement seen by Reuters on Monday.
Bharti Airtel inherited the legal case as part of a $9 billion acquisition of Zain’s Africa operations in 2010, including 65% of Zain Nigeria.
Industry sources said the case would not immediately threaten Airtel Nigeria because Bharti had been adequately indemnified against any potential legal danger when it took over the operator from Kuwait’s Zain -- and because of the small size of Econet’s stake.
The basis of Econet’s claim is that its 5% stake was unfairly cancelled when Zain took control, so any decision made since then without it is void, a claim the court upheld.
“All actions and resolutions taken by the company since October 2003 at which Econet Wireless Limited was entitled to be notified, and to participate in, as a shareholder, but was prohibited, are null and void," the judgement said.
“This includes decisions to sell shares, issue shares, and also transfer shares to third parties."
Econet said this would mean the company’s name would now revert to Econet Wireless Nigeria, and that it would have to reinstate its original 5% stake.
Nigeria contributes about 9.5% to Bharti’s consolidated operational profits, the company says.
Bharti Airtel said in a statement it would appeal the court’s decision and that “the judgement will have no impact on the equity holding of other shareholders in Airtel Nigeria."
Econet said it 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 ongoing since 2003, when the same assets were first sold to Vee Networks.
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