It had already caused its shares to slip on the stock exchanges and given the jitters to investors before Bharti Airtel could get its facts straight on whether Econet Wireless Ltd (EWL) had filed a suit against it to claim $3.1 billion in damages or not.
And when the largest telecom firm found out that contrary to the news report there was “no suit” filed by EWL in any court for any claims, it rushed to clarify and control any further damages.
A note put out by Bharti on Thursday said the amount quoted in the news report had been mentioned in the reply of one of the proceedings.
“EWL has in a reply in one proceeding stated that as presently advised by its financial consultants, the claim for damages and equitable compensation might be in excess of $3 billion bearing in mind that Celtel paid over $1 billion to acquire ANL and then sold ANL to Bharti Airtel for $4.5 billion. EWL knows these are completely spurious and misleading statements and bear no reference to reality,” said the company statement.
Bharti and Econet have been engaged in a legal tussle over the latter’s 5% stake in Bhart Airtel’s Nigerian subsidiary Airtel Networks, which was cancelled in 2003 when its name was changed to Vee Mobile Networks.
Bharti Airtel had bought the stake in the Nigerian company from Zain, who had acquired it from Celtel.
Early this year, a Federal High Court of Nigeria ruling reinstated EWL’s shareholding in EWN — now Airtel Networks- and held that all decisions taken after its ouster from the company as “null and void.”
This included Zain’s stake sale to Bharti too. At that time damages were left undecided.
Post that Airtel Networks has filed an application for stay of the execution of the Nigerian court’s order against which EWN has filed a counter affidavit.
Bharti claims the figure of $3.1 billion that EWL has arrived at had “no basis or justification” and termed it “preposterous.”
Analysts Ankur Rudra and Parita Ashar with local broking house
Ambit do not expect the legal tangle in the African market to have
any impact on Bharti Airtel’s business.
They feel that since Bharti has indemnities from Zain as part of the acquisition, the liabilities, if any, would be on Zain rather than Bharti.
“We do not claim to be experts on Nigerian law. However we fail to see likelihood of Bharti’s African shareholding cancelled on the back of this case. While we recognise that the case is sub judice, assuming Nigeria wasaround 50% of the value that Bharti paid for the Zain acquisition, we would provisionally expect the worst case impact to be 5% of that value to be paid to EWL oraround $240 million (about Rs3 per share),” wrote Rudra and Ashar in their note to investors on Thursday.
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