Big Blow to Bharti Airtel, Loses $3 bn Case in Nigeria

airtel-nigeriaBharti Airtel got a huge blow on Monday when the legal battle between the company’s Nigeria unit and Econet Wireless of Nigeria went in favour of the African operator. Simply put, Bharti Airtel now has to pay up a value of $3 billion to the African operator, though Bharti Airtel has the option to move to the Supreme Court there. “Econet Wireless International remains a bonafide stakeholder in Airtel Nigeria” the Appeal Court in Lagos said on Monday, reported a Nigerian media.

The Appeal Court in Lagos in its judgement on February 14 said Bharti Airtel failed in its bid to set aside the ruling of a lower court on the disposal of some shares of Econet Wireless International.

“We would like to confirm that the Federal Appeals Court of Nigeria, sitting separately in Lagos and Kaduna Nigeria, has recently issued rulings in favour of Econet Wireless International, in its dispute with companies in the Bharti Airtel Group,” said Jerome Lombard, General Counsel, Econet Wireless.

He further said that Econet Wireless does not wish to comment, any further on these matters, at this time.

The ruling appears to have dealt a blow on the quest by Bharti Airtel, the parent company of Airtel Nigeria, to get the rulings of two lower courts quashed over attempts by Econet Wireless International to reacquire its stakes in the company, a media report in Nigeria said.

According to Premium Times of Nigeria, the court had held that an International Tribunal acted properly with its verdict that the sale of 65 per cent of the Nigerian business unit to its predecessor, Zain of Kuwait, was null and void, as it did not follow proper procedures.

When contacted, a Bharti Airtel spokesperson could not offer an immediate comment.

The court also said that Bharti Airtel should accept that Econet Wireless was an shareholder in the company. However, the Indian operator has always rejected this claim by Econet. Econet claims to hold five percent stake in the Nigerian subsidiary of bharti Airtel.

This case pertains to a 2006 deal in which Celtel International bought 65 per cent stake in Nigerian mobile operator Vmobile, which is now owned by Bharti Airtel. VMobile was later acquired by Kuwait’s biggest mobile-phone operator Zain which was in turn acquired by Bharti Airtel in 2010. Econet owned 5 per cent stake in Vmobile and claimed a right of first refusal on Vmobile’s shares. Bharti had acquired Zain’s Nigeria business as part of its $10 bn deal in 2010. Bharti airtel had to inherit the legal tussle between Zain and Econet because of the deal.

When contacted, analysts in Nigeria said the court’s action would badly impact Bharti Airtel’s business in Nigeria.

In October 2012, the High Court in Lagos had rejected the bid of Bharti Airtel seeking to prevent an International Arbitration Tribunal from making its final assessment of the damages claimed by Econet.The tribunal ordered Celtel Nigeria to pay damages and equitable compensation to Econet Wireless for the violation on the company’s rights. Econet has claimed a value of more than $3 billion from Bharti Airtel.

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