Bharti Airtel Facing Possible $3 Billion Bill After Losing Nigerian Court Case

Published on:

Note -- this news article is more than a year old.

India's Bharti Airtel could have to pay USD3 billion to retain ownership of its Nigerian subsidiary after a court ruled against it in an exceptionally long running dispute between shareholders.

The Lagos Appeal Court ruled that a former shareholder, Econet Wireless International remains a shareholder in the company, and that a previous sale of a 65% stake in the local unit to Zain was not valid.

The original court ruling the appeal was against was handed down in October 2012, when the court has dismissed an application by Bharti Airtel to set aside an award made by an international commercial arbitration tribunal in favour of Econet Wireless.

That tribunal award was handed down in December 2011. The whole matter dates back nearly a decade, to when various shareholders, including the Delta State and First Bank sold their stakes to Celtel Wireless (now a Zain subsidiary) in September 2005.

The basis of Econet's claim is that its 5 percent stake was unfairly cancelled when Zain took control, so any decision made since then without it, including the later sale to Bharti Aitel is void.

Back in 2011, the international tribunal found multiple breaches of a shareholders' agreement by both the selling shareholders and Celtel Nigeria, now Bharti Airtel Nigeria, ordering them to pay compensation to Econet.

Bharti Airtel Nigeria has tried to have Econet Wireless removed from the shareholders register, and in a separate ruling, the Federal Appeal Court in Kaduna confirmed that Econet Wireless remains a minority shareholder in the Nigerian company with a 5 percent stake in the firm.

Although that 5 percent stake is not itself worth a huge amount, the company had previously argued that it had a first right to buy the 65% stake, so any compensation would have to reflect its losses from not being able to profit from the growth of the company.

It will be up to the court to decide on the size of the damages, but Econet Wireless has previously said that it is seeking compensation of in excess of USD3 billion.

Page Tools


Tags: bharti airtel  econet wireless  zain  celtel wireless  Nigeria 

Sign up for our free daily email news alerts

Sample Copy