Econet to increase V-Mobile stake

By Damaria Senne, ITWeb senior journalist

Johannesburg, 19 Apr 2006

The Econet Wireless Group has an opportunity to increase its stake in V-Mobile, Nigeria`s third largest mobile operator.

According to Econet spokesman Sure Kamhunga, V-Mobile is offering Econet a 65% stake in V-Mobile for $1 billion.

"Our lawyers are going through the voluminous documents in order to determine that all the details pertaining to the offer are in order," Kamhunga says.

In addition, Econet has dispatched a team to Lagos in Nigeria to conduct a due diligence exercise on V-Mobile.

Kamhunga says as Econet does not know what valuation was used to determine the $1 billion price for the stake on offer, it will wait until the due diligence exercise is complete before commenting on whether the price for the stake offered is fair value.

Econet already owns a 5% stake in V-Mobile, which entitles it to pre-emptive rights should other V-Mobile shareholders wish to sell their shares, he says.

Some V-Mobile shareholders initially refused to allow Econet to exercise the right to make an offer for the stake first, arguing that such a provision was not in the shareholders` agreement. Econet took the matter to arbitration.

Kamhunga says it was due process that Econet be given the opportunity to make a counter-offer for the V-Mobile stake following Celtel`s offer to purchase the 65% stake.

Media reports confirm that Celtel offered $1.05 billion for a 65% stake in V-Mobile. V-Mobile has a subscriber base of approximately five million subscribers.