Bharti Airtel has suffered a major jolt with a Nigerian court upholding a claim by Econet Wireless International that it holds a 5% stake in the company’s African subsidiary. Econet Wireless Nigeria (EWN) has sought damages and compensation of about $3 billion.
“Econet Wireless International remains a bonafide stakeholder in Airtel Nigeria” the Appeal Court in Lagos said on Monday, according to reports in the Nigerian media. The Appeal Court in Lagos in its judgment said Bharti Airtel failed in its bid to set aside the ruling of a lower court on the disposal of some shares of Econet Wireless International.
Bharti said that it will appeal against the judgment before the Supreme Court of Nigeria. Reacting to the $3-billion sought by EWN, the company said, “We would like to unequivocally state that neither of these orders of the Courts of Appeals in Lagos and in Kaduna deal with the quantum of damages and no such quantum has been determined”.
“Bharti Airtel, a 79.06% shareholder in Airtel Networks, Nigeria (Airtel Nigeria), is not satisfied with the judgment delivered on February 14 and will lodge an appeal against that decision at the Supreme Court of Nigeria,” the statement said.
Bharti said the disputed shares are in an escrow account and the judgment would have no impact on the stake of Bharti Airtel or other Airtel Nigeria shareholders. The case pertains to a 2006 deal in which Celtel International bought a 65% stake in Nigerian mobile operator Vmobile — now owned by Bharti Airtel. VMobile was later acquired by Kuwait’s Zain, which was in turn acquired by Bharti Airtel in 2010. Econet owned a 5% stake in Vmobile and claimed a right of first refusal on Vmobile’s shares. Bharti had acquired Zain’s Nigeria unit as part of its $10-billion deal in 2010.
The Bharti Airtel scrip lost nearly 2% on Thursday and finally closed at R296.85, down R6.