South African mobile operator Vodacom is pulling out of its Nigerian wireless partnership.
Vodacom’s withdrawal from the Nigerian mobile market has not come without a price. According to reports, Andrew Mthembu, the deputy chief executive of Vodacom, has been fired, and two other top executives have tendered their resignations.
It was Mr Mthembu’s job to oversee the roll-out of Vodacom’s operations in Africa, where he enjoyed success in establishing its presence in the Democratic Republic of Congo, Tanzania and Mozambique, but his attempts to move into Nigeria went awry.
When it entered the Nigerian market last year, Vodacom found itself at the center of a legal battle with Econet Wireless, which held a 5% stake in Econet Wireless Nigeria and attempted to halt the deal. EWL claimed to have a pre-existing deal to increase its stake to about a third. The case is still awaiting a verdict in the Nigerian courts.
Nigeria is considered a valuable mobile market because although it is still in its infancy, its population of 120 million promises huge long-term returns. Despite this, the decision to enter Nigeria surprised many analysts at the time – not least because Vodacom’s CEO Alan Knott-Craig had previously made clear his opposition to the move. Nigeria is too risky, he said.
However, it is thought that Vodacom’s management came under pressure from shareholders, notably Vodafone, which is keen to expand its global coverage.
Vee Networks is publicly maintaining that Vodacom’s exit from Nigeria follows a mutual agreement between the two organizations, and is not due to any corruption on its part. There has been speculation in the Nigerian press that the deal fell apart after Vodacom refused to pay brokerage fees to go-between companies.
The exit from Nigeria allows Vodacom’s domestic archrival MTN to take advantage of the move because it, along with Vee Networks and Globalcom, holds one of the three mobile licenses issued by the Nigerian government.
