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Squabble over Boksburg phones

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 06 May 2014
Production of locally-made devices is set to start in the second half of this year.
Production of locally-made devices is set to start in the second half of this year.

Two South African companies are headed for a dispute, after a potential deal to assemble and sell home-grown tablets and smartphones fell apart.

Last week, Seemahale Telecoms was surprised to find out through the media that CZ Electronics - its partner in the initial plan to make tablets and smartphones locally - had sold a 75% stake to Mint Electronics, a subsidiary of Limpopo-based mining and energy company Sekoko Holdings, for an undisclosed amount.

Thabo Lehlokoe, chairman of Seemahale Telecoms, is now threatening to go the legal route in a bid to rescue some of the action he would have reaped from being involved in the project. However, Walter Stander, head of corporate affairs for Mint Electronics and CZ Electronics, explains Seemahale's October 2013 deal with CZ had performance criteria that were not met.

Lehlokoe, in turn, argues these criteria were set to be met soon, and a mobile operator was on the verge of signing a multi-year, 100 000-device deal. He says CZ simply became "impatient" and Seemahale's opportunity to earn 51% of CZ, by bringing orders, could have been extended. "This is totally unnecessary."

Stander, however, is unaware of any order from a network operator.

Lehlokoe says he is in talks with lawyers to resolve the situation, as he believes he is entitled to compensation for the work he has done in marketing the handsets. Stander says any threat of legal action is not founded, but would be defended.

However, the dispute is not set to derail production of handsets and tablets, as CZ's strategy is "back on schedule now that the Mint Electronics transaction has been completed", says Stander. He explains the deal will assist CZ Electronics to raise the necessary capital, while improving its empowerment credentials.

CZ Electronics, formed in 2002 with the acquisition of the production assets of the Alcatel factory, in Boksburg, makes electronics on contract for the telecoms, signalling telemetric, defence, utility metering, vehicle tracking and data acquisition industries.

"We are finalising our manufacturing facilities, and will be in a position to roll out full production in the second half of 2014," says Stander. The name of the devices will be revealed at launch.

Sekoko Holdings is a South African black-owned mining and energy company based in Limpopo, with its head office in Johannesburg. It was founded by Limpopo-born businessman Tim Tebeila.

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