Bloomberg News

Congo Court Appoints Administrator for Vodacom Partner CWN

October 26, 2011

(Updates with court’s reasoning in eighth paragraph.)

Oct. 26 (Bloomberg) -- A Democratic Republic of Congo court temporarily replaced the chairman of Vodacom Group Ltd.’s minority partner in its Congolese mobile-phone operation, opening the way for a sale of the venture.

Alieu Conteh, the chairman and founder of Congolese Wireless Network SPRL, will be replaced for at least three months by accountant Mupepe Lebo, according to a Court of Appeals judgment e-mailed by Feruzi Kalume Nyembwe, a director of Keratsu Holding Ltd., which owns 19.6 percent of CWN. CWN owns owns 49 percent of Vodacom Congo SPRL.

Conteh’s lawyers have asked for a delay in the execution of the judgment until the Kinshasa-based court gives further guidance on the provisional administrator’s powers, Joseph Lumbala, Conteh’s lawyer, said in an interview in the capital city today. Conteh will remain chairman of CWN until the court has explained its decision, Lumbala said.

Johannesburg-based Vodacom, the largest provider of wireless services to South Africans, said it on Dec. 22 agreed with CWN to appoint London-based NM Rothschild & Sons Ltd. to “explore options” for its Congo unit. At least four mobile phone companies, including MTN Group Ltd., Africa’s largest, and Angola’s Unitel SA, have expressed interest in buying the venture, Conteh said in an interview in Kinshasa on Oct. 19. MTN, Vodacom and Unitel have declined to comment.

CWN filed papers with the Congolese Commercial Court in Kinshasa last week trying to block the sale process until the company’s shareholders have resolved their dispute, according to copies of the filings provided by Conteh.

‘Lack of Transparency’

Kalume Nyembwe accused Conteh of a “lack of transparency” in his management of CWN and said he was blocking an audit of the company and a general shareholders’ meeting, according to the Court of Appeals decision.

A judge had no right to appoint an administrator to manage the company and Conteh would consider appealing the case to the country’s Supreme Court, Lumbala said. Conteh would accept the provisional administrator as long as he only works on financial matters, he said.

The dispute between CWN’s shareholders risks “paralyzing the company,” giving the Court of Appeal the right to appoint a temporary administrator with “the broadest powers,” the court’s judgment, dated Oct. 21, said.

The decision could allow CWN to hold a general assembly at which a sale of Vodacom Congo would be discussed if the provisional administrator agrees, Kalume Nyembwe said.

Vodacom Congo had 4.2 million subscribers at the end of March, according to Vodacom. It is the third-largest operator in the country, which has 65 million people and a mobile penetration rate of 17 percent, according to the U.S. Central Intelligence Agency’s World Factbook.

--With assistance from Sikonathi Mantshantsha in Johannesburg. Editors: Vernon Wessels, Alastair Reed, Christopher Scinta.

To contact the reporter on this story: Michael J. Kavanagh in Kinshasa at mkavanagh9@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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