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Vodacom issued with court papers

Jan 18 2013 14:08

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Johannesburg - Vodacom Group [JSE:VOD] is facing a court challenge from Wi-Fi specialist WirelessG.

WirelessG claims Vodacom reneged on a shareholder agreement that grants its exclusivity over any Wi-Fi infrastructure Vodacom operates or builds.

In an article that appeared on TechCentral, following a report on Thursday by consumer forum website MyBroadband, WirelessG CEO Carel van der Merwe said Vodacom has backtracked on the agreements between the parties. 

This was after Vodacom realised that “data offloading” onto Wi-Fi from its mobile broadband network was becoming a strategic opportunity.

WirelessG sold the 26% stake in the company to Vodacom at a 49% discount in exchange for various commercial rights, including exclusivity rights for Wi-Fi services and infrastructure.

According to Van der Merwe, Vodacom has consulted with a number of WirelessG’s rivals in the past nine months, including a Wi-Fi pilot project that excluded WirelessG.

“We saw that the spirit of the agreement was not being adhered to.

“We approached Vodacom’s executive team and asked them to honour the agreement. They asked that we relinquish exclusivity before negotiations,” Van der Merwe said.

“My shareholders paid for those rights. There was a request for a discount to the share price which amounted to about R30m.

"Five years ago, Wi-Fi was a poor cousin of connectivity technologies, but now it’s important and there’s money to be made.”

When Vodacom bought the stake in WirelessG, the company said time and resources would limit the focus on technologies like Wi-Fi.

“Vodacom wanted to focus on 3G because the company felt it could make money there. Now that Wi-Fi is becoming important, they want to ignore our agreement and walk all over us,” Van der Merwe said.

WirelessG has spent the past eight months trying to negotiate with Vodacom.

 “We escalated the matter to former Vodacom CEO Pieter Uys and to current CEO Shameel Joosub.

“We were promised there would be commitments about how Vodacom was going to execute the agreement. That deadline hasn’t been met.”

Van der Merwe said he hopes the matter can be resolved, but that Vodacom has given no indication it intends doing so.

“We want an irrevocable commitment about implementation plans and timelines.”

Van der Merwe said WirelessG’s court papers contain a document from Vodacom parent Vodafone indicating it wants to extend its Wi-Fi offerings to the SA operator.

These offerings include its international Wi-Fi hotspots.

Vodacom spokesperson Richard Boorman confirms it received an urgent court application from WirelessG last month but declined to comment, as doing so “may prejudice the case”.

“We’re in the process of compiling a response, which is due on 11 February. The matter is then set down for hearing on 11 March,” Boorman said.

Vodacom believes it has a strong defence, according to Boorman, but will likely try to reach an agreement out of court.



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