Vodacom has filed an answering affidavit to WirelessG’s recent urgent court application, arguing that WirelessG’s claims on WiFi exclusivity is misguided and only pertains to the provisioning of public WiFi.
WirelessG filed an urgent court application in January 2013, arguing that Vodacom is reneging on its shareholder agreement and is in breach of its first right of refusal when it comes to WiFi provisioning.
Vodacom has now hit back, arguing that the agreement between the two companies only pertained to the integration of third party, public hotspot providers for Vodacom.
Relevant clause in the Vodacom-WirelessG shareholder agreement
“Vodacom agreed to extend to WirelessG a first right of refusal to operate a channel to integrate to other (than WirelessG) Wi-Fi infrastructure providers that Vodacom would want to bring on board on offering WiFi to Vodacom customers (a right of first refusal/exclusivity in providing WiFi services to Vodacom’s customers)”
Vodacom argues that, according to WirelessG’s business model, the first right of refusal only pertains to the integration of any other third party public hotspot provider on behalf of Vodacom (see diagram below). These providers include AlwaysOn and Skyrove.
This agreement, Vodacom says, does not include any other WiFi services like private enterprise offerings, point-to-point WiFi services, WiFi offloading or the supply of Wi-Fi equipment.
Vodacom notes that WirelessG describes their own business as a public hotspot provider, which substantiates the mobile operator’s argument that private WiFi services (like WiFi offloading and enterprise services) are not included in the agreement.
Vodacom adds that the agreement, which is illustrated in the diagram above, does not influence its ability to deploy its own WiFi infrastructure.
The mobile operator insists that it has always honoured the agreement to always afford WirelessG the first right of refusal to integrate other public WiFi infrastructure and operate a channel for Vodacom.
The mobile operator explains that the channel refers to supplying vouchers and operating a billing service for public WiFi hotspots.
In another agreement (called the “Binding Agreement”) between WirelessG and Vodacom Service Provider Company – where WirelessG was tasked with supply WiFi and guest Internet access services at Southern Sun hotels – an exclusivity clause was also included.
Clause 2.3 of the “Binding Agreement”
“Pursuant to the Shareholders’ Agreement, Vodacom Ventures (and/or any of its affiliated companies) is not permitted to provide WiFi services independently from WirelessG…”
WirelessG CEO Carel van der Merwe said that this clause reiterates that “Vodacom is not permitted to provide WiFi independently from WirelessG”.
However, Vodacom argued that this clause is pursuant to the shareholders agreement, which means that the shareholders agreement still holds.
“It is submitted that reliance on clause 2.3 of the Binding Agreement constitutes no more than an unwarranted attempt to provide evidence of s restraint which was never agreed upon,” Vodacom stated.