Zain Group to Suspend Investment in Nigerian Operation
- By Abimbola Tooki
- Published March 15th, 2010
- News
- Unrated
THE Zain Group may suspend further investment in its Nigerian operation until its ownership dispute currently before an international arbitration tribunal is resolved. The Group had planned to invest $1 billion annually in Zain Nigeria’s operation till 2011.
BusinessWorld Intelligence can reveal that Zain, which is planning to sell its African wireless assets to Bharti Airtel Limited for $9 billion, has affirmed that the shareholding of its Nigerian unit won’t be changed until the arbitration is concluded.
Sources close to Zain Group disclosed that the Group is treading cautiously so that it doesn’t lose the huge investment already made in the Nigerian operation in the event that the tribunal rules in favour of Econet Wireless Holdings Limited.
Zain Nigeria has been facing challenges in its strategic ambitions as network capacity struggled to keep pace with competition. In Nigeria, the continent’s fastest growing market, Zain has been losing customers and is struggling to turn around the business. It lost its leadership position to competition due to its past boardroom crises and lack of required funding.
There has been a long-running dispute with Econet, which claimed a right of first refusal when a collection of shareholders sold their stakes to Zain in 2006.
Strive Masiyiwa, chief executive officer of Econet Wireless Holdings Limited, confirmed that “the undertaking is still in place” not to sell, transfer or dispose of any of Zain Nigeria’s shares.
Econet is disputing Zain’s ownership of the Lagos-based company because it says it had the first right to buy the stake in Nigerian mobile operator Vee Networks Limited that Zain acquired in 2006.
BusinessWorld Intelligence can reveal that Zain, which is planning to sell its African wireless assets to Bharti Airtel Limited for $9 billion, has affirmed that the shareholding of its Nigerian unit won’t be changed until the arbitration is concluded.
Sources close to Zain Group disclosed that the Group is treading cautiously so that it doesn’t lose the huge investment already made in the Nigerian operation in the event that the tribunal rules in favour of Econet Wireless Holdings Limited.
Zain Nigeria has been facing challenges in its strategic ambitions as network capacity struggled to keep pace with competition. In Nigeria, the continent’s fastest growing market, Zain has been losing customers and is struggling to turn around the business. It lost its leadership position to competition due to its past boardroom crises and lack of required funding.
There has been a long-running dispute with Econet, which claimed a right of first refusal when a collection of shareholders sold their stakes to Zain in 2006.
Strive Masiyiwa, chief executive officer of Econet Wireless Holdings Limited, confirmed that “the undertaking is still in place” not to sell, transfer or dispose of any of Zain Nigeria’s shares.
Econet is disputing Zain’s ownership of the Lagos-based company because it says it had the first right to buy the stake in Nigerian mobile operator Vee Networks Limited that Zain acquired in 2006.
