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Vodacom attempts a comeback

Is Vodacom the comeback kid of Nigeria's Telecom industry? The Vodacom Group of South Africa has been holding fresh talks with its estranged partner, Vee Network Limited, former Econet Wireless Nigeria (EWN) - the operators of Vmobile. Vmobile, one of Nigeria's Global System of Mobile Communication (GSM) operators, is considered to be the third largest GSM operator in Nigeria.

These meetings and talks are coming after Vodacom left Vmobile and Nigeria over six months ago in circumstances that are still unclear and untidy. When Vodacom pulled out of Nigeria, it terminated its plan to inject about $230 million equity investment into Vmobile, which was then branded as Vodacom. It in addition further severed all links by terminating the Management Agreement it had earlier signed with Vee Network Limited.

Many wonder why a company that left so unceremoniously with so much negativity on its trail would suddenly want to come back to Nigeria again. In just six months?! It therefore makes sense to wary of this latest move of Vodacom and wonder about Vodacom's real intentions. The controversy surrounding the way Vodacom left Nigeria is still an unresolved issue. It is instructive to note that the pullout was done in a manner that attempted to paint Nigeria in a bad light. Because of interest in Nigeria's fast growing telecom sector, it attracted headlines worldwide and was a major dent in the present government's desire to attract foreign investment into Nigeria. The negative publicity it gave Nigeria was bad for business and for Nigeria..

A major bone of contention has been the fact that many believe Vodacom has not been sincere about its pullout decision. What really is the whole truth on its decision on "brokerage fees" paid by the Nigerian company to some investment companies which had helped EWN "source" funds? In a statement it issued accusing Vmobile of wrongdoing, corruption was implied. As reported in Nigerian newspapers, the contentious issue was the payment of the "brokerage fees" to three companies who convinced Akwa Ibom, Delta and Lagos state governments to make investments in the former EWN.

Public statements credited to the top shots at Vodacom at that time recommended Vodacom's withdrawal from Nigeria based on the "inappropriate level of risk" in the environment and other issues that had to do with "good corporate governance, and trust."

Many had seen Vodacom's entry into the Nigeria market, as an attempt to meet up or surpass the performance of its South African rival MTN. MTN has been experiencing massive growth and phenomenal performance through its investment in Nigeria. In fact the MTN Group, had overtaken Vodacom by becoming the largest mobile network in Africa in terms of subscriber base, revenue and profit. And this has been simply due to MTN's investments in Nigeria.

Interestingly based on its antecedents, MTN is perceived by many as a more genuine investor in Nigeria's Telecom that deserves the reward it is getting. For example, Vodacom never attempted to get a GSM license while MTN took the risk. It is now that the coast is clear that Vodacom now wants to acquire equity in VMobile. MTN should be commended for its foresight and belief in the Nigerian market. Curiously, during the GSM licensing period, Vodacom never showed interest in the Nigerian Telecom market. What was the perception? The market is too tough or rough? The risk too much? Too volatile? Or was it just simply a case of lack of belief in the Nigerian market? Well, MTN and others have shown that there is reward in the Nigerian market.

The comeback kid

Nobody is really sure what is really motivating Vodacom's interest again, but MTN's incredible performance due to its investment in Nigeria must be a motivating factor. Vodacom is no longer the African leader for this reason alone.

But is Vodacom no longer concerned about issues of "inappropriate level of risk" in the environment and had to do with "good corporate governance, and trust."? Is the Telecom giant accepting that it made a mistake?
After such damaging statements in the untidy manner it left, how will it now comport itself in the Nigerian business environment. Has it done its homework this time? How will it address issues of value and competition? What really is Vodacom's attitude to the Nigerian market? Does it simply see it as a cash cow, ready to be milked?
The future will tell what Vodacom really wants. There is a lot of interest in the eventual outcome of these meetings with Vmobile.