Econet to reverse Zain-Bharti deal?

Strive Masiyiwa, Econet founder (image source: ForgetMeNot Africa)
Nigerian GSM pioneer Econet Wireless International intends to get Zain’s deal with Indian firm Bharti Airtel reversed, in order to resolve Zain’s Nigerian unit ownership situation.

Goldman Sachs analyst Hugh McCaffrey revealed the operator’s intentions after meeting with Strive Masiyiwa, Chairman of Econet Wireless, according to Nigerian publication Vanguard.

“Econet management intends to reverse the transaction and exercise its right of first refusal on the 65% stake in the Nigerian asset. However, an issue that may potentially affect the closure of the transaction is the ownership dispute from minority shareholders of the Nigerian unit”, reported McCaffrey.

The analyst mentioned that Bharti might opt to surrender ownership rights in the Nigerian asset as a result of the ownership dispute. According to Econet, Zain’s Nigerian assets should not be counted for sale until the shareholding is resolved.

“Econet management would also likely claim damages against Zain. If successful, in a worst-case scenario, Bharti would have to relinquish ownership rights over the Nigerian assets and perhaps renegotiate the amount it paid to Zain to acquire its African assets, in our view”, noted the Goldman Sachs report.

However, international reports note that Bharti has already secured indemnities and warrants to prevent it from any potential legal ownership disputes.

Econet’s suits are justified by the company’s 5% ownership in Zain. Broad Communications, whose CEO is Oba Otudeko, Chairman of Nigeria’s biggest bank, First Bank of Nigeria, holds 14% of the network’s equity.
Econet has opened two court cases against Zain, in Nigerian and Dutch courts.