Vodacom pledges to stay in DRC market

Vodacom no longer planned to exit the Democratic Republic of Congo (DRC) and wanted to resolve a long-standing dispute with its local partner to tap a growing market, the new chief executive said on Friday.

The South African unit of Vodafone had said it was looking to exit the business in that country where it has been locked in a row with Congolese Wireless Network (CWN) over fees.

28/09/2012 Shameel Joosub new CEO of Vodacom during a media round table at Sandton JHB. (008)Photo: Leon Nicholas. Credit: INLSA

“We are working with the local partner to resolve the issues. We are confident the issues are resolvable,” Shameel Joosub said at a briefing.

Joosub, 41, was speaking to reporters for the first time since taking over as the company’s chief executive last month.

“Certainly for a group like Vodacom it’s preferable to remain in the DRC because it is a market that offers excellent growth potential,” said David Lerche, a telecoms analyst at Avior Research in Johannesburg.

The DRC, which has a population of about 65 million, had a cellphone penetration rate of just 17 percent in 2010, according to the International Telecommunication Union, and its economy is expected to grow by around 7 percent a year until 2015.

In 2009 CWN lodged a legal complaint against Vodacom claiming $166 million (R1.4 billion at today’s rates) for excessive interest rates and service fees charged by Vodacom for nearly a decade. Vodacom appointed investment bank Rothschild to “explore options” for its 51 percent stake in the unit, including a sale.

The process was halted after a DRC court ordered Vodacom to pay $21m in consulting fees to a separate firm or face the loss of its stake. That dispute is also continuing.

Vodacom had spent $15 million on a third-generation (3G) licence in the DRC and had launched the service in the capital Kinshasa, Joosub said. It also planned to roll out fourth-generation services in South Africa by the end of this year, Joosub said.

Although Vodacom has the largest subscriber base in South Africa, it is dwarfed on the continent by MTN Group.

It has over 50 million subscribers across its five operations, including in Mozambique, Tanzania and Lesotho, and is pursuing a few expansion opportunities.

“We are more confident about more expansion opportunities,” Joosub said.