Econet seeks $3.1 billion damages from Bharti Airtel
February 22, 2012
South Africa-based Econet Wireless is seeking at least $3.1 billion in damages from Bharti Airtel in a dispute over ownership of the Indian group's subsidiary Airtel Nigeria, according to a suit filed on Wednesday.
The move follows a Nigerian court ruling on Jan. 30 that Bharti Airtel's ownership of Airtel Nigeria is "null and void" because co-founder and 5 percent shareholder Econet was not consulted on the transfer.
Bharti said on Feb. 8 that its stake in its Nigerian unit was "completely safe" and that the world's fifth-biggest mobile phone carrier by subscribers had appealed against the verdict.
"The claim for damages and equitable compensation against the applicant and some of the respondents might be in excess of $3 billion," the document filed to the court said.
"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 Airtel did not immediately comment.
The operator inherited the legal case as part of a $9 billion acquisition of Zain's African operations in 2010, including 65 percent of Zain Nigeria.
The basis of Econet's claim is that its 5 percent stake was unfairly cancelled when Zain took control, so any decision made since then without it, including the transfer to Bharti, is void. The Nigerian court upheld that claim.
Nigeria contributes about 9.5 percent to Bharti's consolidated operational profits, the company says.
Econet 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. (Additional reporting by Devidutta Tripathy in New Delhi; Editing by Helen Massy-Beresford)