Vodacom Congo faces share seizure

Time of article published Mar 29, 2012

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Bloomberg and Asha Speckman

VODACOM may lose control of its cellular unit in the Democratic Republic of Congo (DRC) after a court ordered its shares to be confiscated to settle a $21 million (R162m) dispute with a consultant.

On Monday the Kinshasa Commercial Court issued the order to attach Vodacom’s 510 000 shares in its 51 percent held Vodacom Congo SPRL unit to enforce its January 25 judgment that Vodacom pay Moto Mabanga’s Namemco Energy a $21m consultancy fee, according to court documents provided by Mabanga.

Investors hardly blinked at the news, which broke at lunchtime yesterday.

Vodacom was up 1.46 percent by 2.32pm on the JSE and closed 1.2 percent up at R106.37.

Khulekani Dlamini, the head of research at Afena Capital, said the amount Vodacom was ordered to pay was equal to about 0.1 percent of its market capitalisation and 1.4 percent of Vodacom’s dividend yield.

“It’s not really devastating… the DRC in the grand scheme of things is a marginal contributor,” Dlamini said. “With all the problems they’ve had with that business they would be better off selling it.”

Farai Mapfinya, an equity analyst at Sanlam Private Investments, said Vodacom Congo contributed 2.7 percent to group revenue and 0.8 percent to group earnings before interest, tax, depreciation and amortisation.

“The Congolese business is quite healthy and if shareholder issues could be resolved it is still quite an attractive asset,” Mapfinya said.

Pieter Uys, the chief executive of Vodacom, said yesterday: “Vodacom’s appeal against the judgment is still before the court.” Company spokesman Richard Boorman could not confirm when the appeal would be heard.

Mabanga said: “The court is handling the attachment and will determine how many shares must be sold to pay me.”

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