KEY FACTS

• The High Court in Lagos, Nigeria, dismisses Bharti Airtel's appeal to set aside an award made by an international commercial arbitration tribunal in favour of Econet Wireless
• The judgement paves the way for the matter to be referred back to the international tribunal to set the quantum of damages and compensation that Bharti must pay Econet Wireless
• In Court papers, Econet said that it is submitting a claim valued in excess of $3bn
• In the extensive judgement, the Lagos High Court found that the international Tribunal had been correctly constituted, had jurisdiction and had acted correctly on all accounts.

To see full PDF - Click here - Judgement of the High Court on the arbitral appeal

LAGOS HIGH COURT REJECTS BHARTI APPLICATION TO SET ASIDE TRIBUNAL AWARD.

Nigeria – 4 October 2012: The High Court in Lagos, Nigeria, today dismissed an application by Bharti Airtel to set aside an award made by an international commercial arbitration tribunal in favour of Econet Wireless. The judgement paves the way for the matter to be referred back to the international tribunal to set the quantum of damages and compensation that Bharti must pay to Econet Wireless. In Court papers, Econet said that it is submitting a claim valued in excess of $3bn.

The international tribunal (comprising senior Nigerian and English lawyers) found multiple breaches of a shareholders’ agreement by both the selling shareholders and Celtel Nigeria, now Bharti Airtel Nigeria, ordering them to pay damages/equitable compensation to Econet (in an amount to be determined in a further round of the arbitration).  The ruling said that the purchase of a 65% shareholding in Nigeria's second largest cell phone company, by Celtel, was violated the pre-emption rights of existing shareholder, Econet Wireless. Celtel’s parent company, Zain of Kuwait later sold the controlling stake to Bharti Airtel, the Indian telecoms operator. The international tribunal’s award was handed down in December last year.

In an extensive judgment, the Lagos High Court found that the International Tribunal had been correctly constituted, had jurisdiction and had acted correctly on all accounts.

Econet Wireless has chosen Zimbabwe as its first commercial site for its highly acclaimed solar powered 'Home Power Station'

The award winning system, which was invented by Econet Wireless engineers in South Africa, has received global recognition for innovation, and has been reported on by some of the leading media in the world.

Until now Econet Solar, the company set up to promote the invention has been running field trials in South Africa's Kwazulu Natal province, but now the team has began to work on commercial field trials.

Econet Solar, CEO Mr Luc Tanoh said that the Zimbabwean commercial field trials are the next big step before full commercial service.

“We are now ready for commercial field trials with selected customers in Zimbabwe, which is our first commercial site,” he said.

Mr Tanoh said the solar powered Home Power Station is a “truly remarkable product, and will change the lives of millions of people who have no access to the electricity grid.'”

Econet Solar plans to roll out the service in every African country and intends to licence other cell phone companies to use its technology.

Bharti seeks to block International Tribunal from quantifying compensation and damages owed to Econet.

The Lagos High Court yesterday heard an application by Bharti Airtel, an Indian telecommunications group, and others seeking to prevent an International Arbitration Tribunal from making its final assessment of the quantum of damages and equitable compensation that they must pay to Econet Wireless for the violation of its shareholder rights.

In December last year an International Tribunal, set up under the auspices of the United Nations Commision for International Trade Law (UNCITRAL) and comprising senior lawyers from Nigeria and England, found that there had been multiple breaches of the shareholders agreement when Celtel Nigeria, now Bharti Airtel, had acquired control of 65% of the shares in the Company and ordered them to pay damages and equitable compensation to Econet. The amount due to Econet will be set in the final stage of the Arbitral process which Bharti is now seeking to prevent taking place.

The hearing of the Bharti application started in April, and yesterday, 4th June, was the first day of the substantive case, when legal representatives of both parties presented their arguments to the Court. The Judge concluded yesterday's hearing by adjourning the proceedings until 4th October for the handing down of her decision.

In its written submission to the Court, Econet Wireless said that its experts believe the quantum of the equitable compensation and damages amounts to more than US$3bn.

MOREHOUSE COLLEGE HONOURS AFRICAN BUSINESSMAN FOR HUMANITARIAN WORK

One of the most respected Universities in America, Morehouse College where the late civil rights leader Dr Martin Luther King Jnr was educated has honoured Zimbabwean born businessman and philanthropist Strive Masiyiwa with an honorary doctorate for his humanitarian work and philanthropy. 

Mr Masiyiwa who founded Econet Wireless, a global telecommunications company with interests and operations on four continents, is considered one of the most successful African business men and has earned international acclaim for his 'zero tolerance' to corrupt business practices.

As a philanthropist Mr Masiyiwa has invested most of his personal wealth in providing educational support to hundreds of thousands of orphans. At any given time more than 40 000 orphans in Africa are on educational support. He has also provided health care facilities, and also sends some of the brightest young Africans to universities and colleges around the world, including more than 30 currently studying in the United States.

As a humanitarian, Mr Masiyiwa is recognised the world over for his work with organisations like the Rockefeller Foundation, where he is a trustee; the Humanitarian Prize where he is a juror; the Holocaust Museum in Washington, where he sits on its global genocide watch committee; the Carbon War Room which he started with Richard Branson; the global eHealth programme which he helped found with South Africa’s Bishop Desmond Tutu.

His work in promoting the interests of small holder farmers in Africa was recently recognised by President Obama, when he invited him to join a meeting at Camp David with G-8 leaders, the first time private business man from Africa have been invited to sit in with the G-8 leaders, to discuss an issue of global concern. In a statement, Mr Masiyiwa said that he was honoured and humbled to have been given such a prestigious recognition. “When I first learned to read as a child, I learnt of this man called Martin Luther King, and I discovered then, that he was a Morehouse man, and I always wanted to come here."

London - Econet Wireless Group (EWG) has concluded a $362m loan facility to use in some of its African operations.

The facility was arranged by AfriEximbank, and syndicated to development and financial institutions from Germany ( Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG), France (Societe De Promotion Et De Participation Pour La Cooperation Economique (PROPARCO) , China (China Development Bank Corporation(CDB), the Netherlands (Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), South Africa ( Industrial Development Corporation of South Africa (IDC), and Sweden ( Exportkreditnämnden (EKN).

It was signed in London at a special ceremony on May 23 2012, attended by representatives from all the financial institutions. Strive Masiyiwa, the Econet Wireless founder, signed on behalf of his group.

A significant amount of the facility - $307 million - has been earmarked towards, its Zimbabwean subsidiary, Econet Wireless Zimbabwe( EWZ), which is listed on the local exchange.

In a statement, Douglas Mboweni, CEO of the Zimbabwe business, said $255m from the $307m would re-finance existing short-term facilities, whilst $52m will finance equipment purchases for further expansion. He said the tenor of the facilities was an average of 5 years and the blended rate was LIBOR plus 5,3%.

Mr Mboweni noted that borrowing for its expansion projects remained possible only through its parent company.

International Tribunal awards damages to Econet in claim over 65% stake in Bharti Nigeria

Econet Wireless Limited (“EWL”) has been victorious for a second time in less than a month in long-running legal cases to establish its ownership rights to shares in the Bharti Airtel operator in Nigeria (“Bharti Nigeria”). 

In an up-beat start to the year, EWL has not only won its long-running battle in the Nigerian Federal High Court to confirm its 5% take in Bharti Nigeria, but has also been victorious in an International Arbitration examining the deal by which Celtel Nigeria, now owned by Bharti, seized control of 65% of the Nigerian operator in 2006. 

The International UNCITRAL Tribunal (comprising senior Nigerian and English lawyers) found multiple breaches of a shareholders’ agreement by both the selling shareholders and Celtel Nigeria, ordering them to pay damages/equitable compensation to Econet (in an amount to be determined in a further round of the arbitration). 

In a statement Econet said: “We are naturally pleased that we received very clear findings in our favour in both of these actions.  As SingTel (part-owner of Bharti Airtel) has been forced to acknowledge in its latest Q3 results, both outcomes are clearly “unfavourable rulings” from their perspective – but to Econet they represent a vindication of its long campaign for restoration of its rights in Nigeria, and for compensation for loss of a controlling stake which has since been sold to Bharti for a premium of several billion dollars.”

To view the SingTel Q3 results extract - Click here (97Kb PDF)

MEDIA UPDATE STATEMENT ON THE RELEASE OF THE WRITTEN TRANSCRIPT OF THE JUDGMENT IN FAVOUR OF ECONET ON THE OWNERSHIP OF THE 5% BHARTI AIRTEL NETWORKS NIGERIA

The Federal High Court of Nigeria, on 10th February 2012, released the written transcript of its judgment handed down on 24th January 2012. The transcript is a public document which can be obtained directly from the Federal High Court in Kaduna.

Econet lawyers have transcribed a summary of the key points in the judgment, and a summary is attached to this statement, for ease of reference. The full transcript, as well as this summary are available below:

Full transcript of judgment (1,7Mb PDF)

Summary extract from the judgment of Justice Shuaibu (600Kb PDF)

Developments since the ruling:

On 26th January 2012, Airtel Networks Limited (formerly Econet Wireless Nigeria Limited (“Bharti”), filed an Application for Stay of Execution of the said court judgment, made in favor of Econet. In its application, Bharti told the court that, if the judgment is implemented, it would have the following effect:

“… that:

5.1       the Judgment, particularly the nullification of the decisions held at the meetings to which the Plaintiff #(Econet) was not invited will adversely affect the operations of the Applicant #(Bharti), and its corporate existence, and may impair its ability to effectively prosecute its appeal against the Judgment;

5.2       If the effect of the Judgment is not suspended pending the determination of the Applicant’s appeal, a number of key corporate actions taken by the Applicant will be unraveled and this will cause the Applicant incalculable financial loss.”

A full copy of the above application can be obtained from the Federal High Court in Kaduna or by clicking the link below:

Application for stay of execution (6MbPDF)

Econet filed a Counter Affidavit on 8 February 2012, opposing Bharti’s Application for Stay of Execution. In its Counter Affidavit, Econet claims that the allegations by Bharti on the impact of the said judgment if executed, as referred to in paragraphs 5.1 and 5.2 of Bharti’s application, “are false”, and Econet has submitted a press statement issued by Bharti, on 27 January 2012, in which it stated, as follows:

“We wish to assure our customers, employees and business partners that the ruling will in no way affect operations or the company’s ability to fulfill obligations to its stakeholders”

A full copy of the Econet Counter Affidavit can be obtained from the Federal High Court in Kaduna or by clicking the link below:

Econet Counter Affadavit (17Mb PDF)

Notes:

Bharti Airtel acquired the African Assets of Zain of Kuwait at a reported US$10.7bn. The Nigerian business was valued in the transaction at US$4.5bn. This places the value of the Econet’s 5% shareholding at the time at US$225m.

# Have been inserted

BHARTI AIRTEL APPLICATION FOR INJUNCTION AGAINST ECONET WIRELESS

On 24th January 2012, the Federal High Court of Nigeria ruled in favor of Econet Wireless Limited (“Econet”), an international telecommunications group, based in South Africa, in it's dispute with Airtel Networks Limited (“Bharti”), over the ownership of a 5% stake, in Bharti (formerly Econet Wireless Nigeria Limited).

The court ordered that Bharti restore the 5% stake, which was stripped from Econet in 2003, by the board of directors of Bharti. The court also ordered that all resolutions, and decisions taken by Bharti, since November 2003, to date, in which Econet, was excluded as a shareholder, are null and void.

Bharti bought 65% of the company in Nigeria, in 2009, as part of an acquisition of the African businesses of Zain of Kuwait. At the time of the sale Bharti valued, the Nigerian company, which it renamed Airtel Networks Limited, at over US$4,5bn. This would have valued the Econet 5% stake, at over US$220m, at the time.

A written copy of the court's judgment has not yet been released by the Federal High Court. Once this is available, Econet will publish it in full on its website (www Econetwireless.com).

On 26th January 2012, Bharti filed an Application for Stay of Execution in the Federal High Court, requesting the Court to grant it an injunction, and to stop Econet from exercising its rights under the court judgment, until an appeal has been heard, by the Court of Appeals of Nigeria.

The following is an extract from its application, for 'Stay of Execution', as it is called in Nigeria:

            “… that:

5.1       the Judgment, particularly the nullification of the decisions held at the meetings to which the Plaintiff #(Econet) was not invited will adversely affect the operations of the Applicant #(Bharti), and its corporate existence, and may impair its ability to effectively prosecute its appeal against the Judgment;

5.2       If the effect of the Judgment is not suspended pending the determination of the Applicant’s appeal, a number of key corporate actions taken by the Applicant will be unraveled and this will cause the Applicant incalculable financial loss.”

A full copy of this application, which is a public court document, is hereby provided: click to download (6.4Mb)

On 8 February 2012 Econet's lawyers in Nigeria, filed an application opposing the Bharti application.
A full copy of this opposing motion, which is a public court document, is hereby provided: Click to download (17Mb)

The Federal High Court has now changed the date of the hearing, on Bharti's application from 16 to 22 February 2012, in Kaduna, Nigeria. It will be in open court, and members of the public and media, are free to attend.

# Have been inserted

Further to our statement issued on the morning of 30th January 2012, in which we announced that Econet Wireless was issued a judgment in its favour by the Federal High Court of Nigeria, Econet Wireless would like to offer the following update:

The judgment of the Federal High Court of Nigeria was issued on the morning of 24th January 2012. The Judge, Hon Schaib, read the ruling out in an open court, in the attendance of lawyers and representatives of the applicant and defendants. All were present as required by the law, having been duly notified in advance that the judge would be handing down judgement in the matter.

No written copy of the judgment was released by the judge, but he promised to have the full written copy, published within two weeks. It is our intention to publish the full copy of the judgement on our website and in the media in order that everyone can see the matters for determination and ascertain for themselves, the prospects of success of any appeal, as the case may be.

Meanwhile, following the judgement, lawyers for the defendant, now Bharti Airtel, immediately rushed to file a 'Notice of Appeal' as well as separately an 'Application for stay of execution, of Execution of The judgement' pending an appeal hearing and determination. This is their prerogative, which we respect.

In the 'Application for a stay', Bharti Airtel, through their lawyers have given a detailed outline of what they consider to be the potential impact of this ruling. This document is a public document and may be obtained from the Nigerian courts. However for ease of reference, Econet Wireless hereby publishes the full document from Bharti Airtel Nigeria, as it was served on our lawyers, on Friday evening, and brought to our attention yesterday. Your attention is drawn most specifically, to the grounds of Bharti's Appeal and what they perceive to be the impact of the judgment. Econet Wireless has also noted the statement, issued by Bharti to the media addressing the same issue.

Commenting on the decision, Econet Wireless Group Chairman - Mr Strive Masiyiwa said:

“It is universally accepted throughout the world, that when shares in a company are allotted and share certificates issued, as confirmation of ownership, this is sacrosanct.

“In October 2003, Econet Wireless Ltd received a letter from the chairman of the company - Mr Oba Otudeko, in which he advised that at a board meeting directors had decided that Econet Wireless was no longer a shareholder, Econet’s share certificate had been cancelled, and Econet’s name removed from the shareholder register. The motive for this unprecedented action was the circumvention of Econet Wireless' rights as a shareholder in order to facilitate the sale of shares, first to Celtel International, and later to Bharti Airtel.

“As a result of these actions, Econet Wireless was left with no option but to seek redress through the courts. An application was filed in the Nigerian Federal High Court in October 2003, more than eight years ago. Since then, every legal avenue to delay the process was pursued by the defendants  through their lawyers, in order to  frustrate Econet Wireless.

“I am very disappointed that whilst it was clear to Celtel, Zain and Bharti-Airtel that Econet Wireless was a shareholder, they still chose to pursue a path, in which the end justified the means. It is clear even to those with the most basic understanding of company law that the board of a company has no power in any jurisdiction to simply cancel the shares of a shareholder but their desire to own the company was so great that they were prepared to overlook the facts and ignore our rights

“The substance of this ruling, which was known by Celtel and then Bharti, was a matter of record in the legal documents of the company. It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company.

We have made it clear to the company, that as a shareholder, we would like to ensure that all actions that must be taken to comply with the court order are undertaken in such a way that there is minimal disruption to the ongoing operations of the company.

“The board of Econet Wireless and I remain willing to sit down with Bharti-Airtel, to review the best way forward for all parties. In the meantime, we have a fiduciary responsibility to take all of the necessary steps to vigorously protect the interests of our shareholders.”

Econet Solar to licence operators


Econet Solar, the energy division of global telecoms group Econet Wireless, has said it will license its breakthrough solar lighting solution to telecoms operators from around the world.

The company said it has received numerous enquiries from operators all around the world who want to use the patented technology to offer lighting to low income customers.

The Econet Solar, HomePowerStation, was recently launched at the Durban climate conference. It can only be provided through a cell phone network, as it charges for lighting using a software application at the network switching system.

Econet Solar CEO Marco Signorini, said the first commercial services were expected at the end of February 2012. He said negotiations with operator partners who will offer the service in their markets had already started.

In markets where Econet does not operate a network, we are licensing other operators to offer the service using our solution, he said. Mr Signorini said enquiries had come from operators as far a field as India and the Caribbean. In Africa we expect to have an operator for each market by June, he said.

Econet Solar website - Click here to visit