Airtel in trouble, faces $3.1b law suit for damages in Nigeria
South African firm, Econet Wireless is seeking at least $3.1 billion in damages from Bharti Airtel in a dispute over ownership of Airtel Nigeria, the Reuters News Agency has reported February 22, 2012 citing a suit Econet said it had filed.
Bharti acquired the African operations of Kuwaiti company Zain in 2010, including 65 percent of Zain Nigeria, renamed Airtel Nigeria, but a Nigerian court, reports Reuters, ruled on January 30 that its ownership of the unit was “null and void” because co-founder and 5% shareholder Econet had not been consulted on the transfer.
Econet claims its stake was unfairly cancelled when Zain took control in 2005, so any decision made since then without it, including the $10 billion transfer to Bharti from Zain, is void. The Reuters report said the Nigerian court upheld that claim.
“The claim for damages and equitable compensation against the applicant and some of the respondents might be in excess of $3 billion,” said Econet in the suit.
It added, “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 for Airtel) for a period of six years, which sum should have accrued.”
Bharti’s spokesman said the Econet stake had not been cancelled but had been set aside pending final resolution of litigation on the matter, according to the Reuters report.
Meanwhile, shares in Bharti Airtel on Thursday is said to be falling to as much as 4% after Econet filed the suit.
By 0447 GMT, Bharti shares, valued at about $26 billion, were down 1.5 percent at 342.40 rupees in a Mumbai market that was down 0.2 percent, said a Reuters publication February 23, 2012.
Bharti Airtel bought the assets of Zain in Africa for a record sum of $10.7 billion in June 2010. The World Bank described the deal as one of the largest global acquisitions of that year.
By Ekow Quandzie