Vodacom Group Ltd. (VOD) said a Democratic Republic of Congo court canceled a forced sale of its stake in a local unit, allowing South Africa’s biggest wireless carrier to retain a foothold in the fast-growing market.
A letter from Congo’s supreme court “postpones the auction pending the outcome of certain legal proceedings already under way,” Richard Boorman, a spokesman for Vodacom, said in an e- mailed statement. Another court had planned to push through a disposal to help enforce a ruling that Vodacom pays a former consultant to settle a dispute.
The decision lets Johannesburg-based Vodacom, controlled by Vodafone Group Plc (VOD), for now to keep a stake in a market Chief Executive Officer Pieter Uys has called its biggest opportunity. Only about 21 percent of Congo’s more than 70 million people have mobile phones, compared with a penetration rate topping 100 percent in Vodacom’s home market.
The shares, seized by the commercial court from Vodacom on May 16, represent Vodacom’s entire 51 percent stake in the unit, in which the company says it has invested about $500 million in the past nine years. The unit had about 5.6 million customers at the end of March and it employs about 600 people.
Uys said on May 21 that the company would do everything to prevent the sale of its shares and had started three separate court processes to that effect.
Vodacom advanced 0.3 percent to 102 rand at the close of trading in Johannesburg. The stock has gained 15 percent this year, compared with a 3.4 percent gain by the FTSE/JSE Africa All Shares Index, valuing the company at 152 billion rand ($17.9 billion).
The commercial court in the capital Kinshasa had planned to sell Vodacom’s 510,000 shares in Vodacom Congo SPRL in a June 3 auction in order to enforce its Jan. 25 ruling that Vodacom pay former consultant Moto Mabanga’s Nameco Energy (Pty) Ltd. $21 million to settle a dispute.
Mabanga sued Vodacom last year, seeking a $40.8 million fee for consultancy work done during 2007 and 2008. The commercial court ruled on a reduced award in January. Mabanga was already paid a $2.8 million service fee for the consulting work, which Vodacom maintains was a full and final settlement of its obligations.
In a phone interview, Mabanga said he plans to try to contest the latest court decision.
“We received a letter that the auction has been stopped,” Mabanga said. “We’ll now be going to court to reverse that irregular action and get a new date.”
To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at firstname.lastname@example.org