The telecommunication industry in Nigeria does not have a lot of players, but of the few in existence, Airtel Nigeria is one of peculiar interest to Nigerian subscribers.
Having seen the telco change its management six times and brand name five times, with each lasting about three years or less, a lot of users agree that they would not be surprised to see another change.
However, the company appears to have stabilised under its current management – Bharti Airtel and retained the name longer than every other one before it.
So, let’s look at the story behind the company that is now the second most popular telco in Nigeria.
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The days of Econet
In 2001, Strive Masiyiwa assembled a consortium of 22 investors in order to raise money to bid for the $285 million GSM license, which he described at the time as “the most expensive license ever issued in Africa.”
Alongside MTN Nigeria and MTEL, Econet won the bid and was granted a Digital Mobile License (DML). Econet Wireless Nigeria immediately set up shop and started operations, gaining an estimated 57% market share in a short period, despite the existence of competition.
All seemed to be running smoothly until Masiyiwa was asked to pay about $9m in ‘bribes’ to senior politicians in different state governments, who had facilitated the fundraising to pay for the license.
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According to Masiyiwa’s social media post years later, he did not authorize the payments and thus invoked the wrath of a Governor in the South-south region at the time, who was one of the most powerful politicians in the country and had a reputation for getting what he wanted at any cost.
The Governor made good on his threat and without justification, the shareholders met and voted Econet Wireless Nigeria out of management, effectively cancelling their contract.
Masiyiwa recalled that at the meeting, one of the politicians who also happened to be a businessman told him, “Unfortunately for you, God does not have a vote.”
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This move nearly drove Econet into bankruptcy and led them to withdraw about 200 foreign staff and left Nigeria. It also marked the beginning of Vodacom, the name adopted by the big international operator which was invited to take over as technical partner and operator.
Although there is no evidence to conclude that the new operators paid the ‘bribes’, Masiyiwa insists in his blog that he has access to documentation showing that they paid the money. It was on this basis that he would later write a letter to the United States Department of Justice.
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Vodacom to the rescue
With the change of management, Vodacom came into the picture in 2004 but its contract was over before it even started.
Not much information is publicly available about the events that led to the exit of Vodacom in such a short while, without even having the opportunity to change the brand name.
Within a couple of months, Vodacom left the wheels and management changed hands again – this time to Vee Networks. At this time, the company had close to a million subscribers.
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Now V-mobile and it’s all about you
With Vee Networks as the new manager, the company’s name was changed to V-mobile and it launched a rebranding campaign in 2004.
Perhaps, the name change was to send a signal that a new company is in charge or to assure customers that the change of management could only be in their interest. The campaign branded the telco as the network for the Nigerian people, with the catchphrase being “It’s all about you”.
According to the company, all of its investors were Nigerian-based, including three state governments – Lagos, Delta, and Akwa Ibom.
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The name V-mobile is believed to have been adopted from the Vee in Vodacom, and the new managers also retained quite a number of Vodacom’s South African staff, with some of Econet staff as board directors.
In this way, V-mobile retained a little of the character of its past owners.
Then came Celtel
In May 2006, exactly two years after Vee Networks took over the reins with all its corresponding campaigns, Celtel communications acquired V-mobile for $1.005 billion and gained a controlling share of 65 percent ownership.
The transaction covered the purchase of existing shares and a substantial equity injection expected to boost Vmobile’s financial ability to realize its growth potential.
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Celtel International, a subsidiary of MTC Group and a leading mobile operator in Africa was thus going to expand its presence to Nigeria, making a total of 15 countries.
Before this acquisition, V-Mobile had already grown the subscriber base from less than 1 million to over 5 million subscribers in two years – the most significant growth the company had witnessed under a single management at the time.
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History strikes again
There was yet again another change in management. In 2008, another telecommunications company, Zain Group, completed its acquisition of all Celtel International’s shares of over $3 billion.
The Zain Group had earlier acquired 85% stakes in Celtel International and its 14 African subsidiaries in May 2005 in a $2.84 billion deal and increased it to 100% two years later.
With the completion of this acquisition, all of Celtel’s operations in Africa had to be rebranded into Zain. So, it was not just the end of Celtel in Nigeria but also in Africa, as the new owners rebranded the entire African operations to Zain.
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“We believe the Zain brand provides an optimal platform upon which we can build a top 100 global brand with the ultimate goal of better serving our customers. It builds upon the success of our African operations and will propel the Zain Group towards becoming one of the top ten global mobile telecommunications companies by 2011,” Zain Group’s Chief Executive Officer, Dr. Saad Al Barrak said at a press conference.
But it only took two years before the management ran into a brick wall.
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Bharti Airtel arrives to save the day
In November 2010, another acquisition took place and Bharti Airtel paid a sum of $10.7 billion to become the new owner of the telco. Zain Nigeria became Airtel Nigeria.
It is now exactly a decade since this acquisition, and it seems like the company might be done with the days of management and brand changes.
The company seems to have now stabilised, and was even rated as the second largest in terms of subscriber base at the end of Q2, 2020. The financials have also remained in the black.
READ: Airtel is partnering Standard Chartered Bank as it expands its fintech business
Court disputes
In 2014, a decade after Econet lost its management contract, the Appeal Court sitting in Lagos ruled that Econet Wireless International remains a bonafide stakeholder in Airtel Nigeria.
This ruling frustrated the efforts of Bharti Airtel to prevent Econet Wireless International from reacquiring its stakes in the company.
The court also held that the earlier sale of 65 per cent of the telco to Zain of Kuwait was in violation of the pre-emptive rights of existing shareholder, Econet Wireless and null, since it did not follow proper procedures.
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In a separate but similar ruling, the Federal Appeal Court in Kaduna had ruled that Econet Wireless was an existing minority shareholder in the company and urged Bharti Airtel to accept the reality.
Prior to this time, Bharti Airtel had continued to reject Econet Wireless as the holder of five per cent equity stake and tried to get Econet removed from the register of shareholders.
The dispute between Zain and Econet over the 2006 sale was already on and Bharti Airtel inherited the dispute. Econet was thus seeking equitable compensation for multiple breaches of the shareholders’ agreement.
Econet said in its submissions that its experts believed the quantum of the equitable compensation and damages amounted to more than $3 billion.
In December 2011, an international tribunal constituted under the auspices of the United Nations Commission for International Trade Law, UNCITRAL, ordered Celtel Nigeria to pay damages and equitable compensation to Econet Wireless for the violation of the company’s rights, which finally freed Bharti Airtel of any charges.
Dear Ruth,
That was a nice write up especially for those who are not in the picture of how the telcos in Nigeria came to be. It is also embarrassing that corruption by our public officials led to the changes in management as the initial owners refused to play ball. But does that mean that the other telcos paid bribe that ECONET refused to pay?
This question is about 19 years old. Nobody has answered it
Great write up, next you can come up with how Bharti Airtel did this despite facing huge challenge in its home ground by Jio and other AGR litigations
Very likely that the bribe was eventually paid. The case involved Tinubu, Ibori and Victor Attah.
His(Masiwaya) report to the US and UK was part of what led to Ibori conviction in UK.
Hello Ruth,
Thank you for this insight!! As someone in the cabling business rendering last mile connectivity services to Telcos / ISPs (& private institutions) I never knew these in details! ?
Thank you!?
This is quite insightful
Thank you Ruth for this inside I really enjoy reading this
I will one day buy this company