The Huge Group has told shareholders it has paid MTN Service Provider (MTN SP) a sum of R10 million, in terms of a settlement agreement between the two, resulting in all legal action instituted by the mobile provider against the Huge parties to be withdrawn.
The settlement refers to a dispute between the Huge Group and MTN SP, which dates back to MTN's 2009 purchase of iTalk. The disagreement stems from whether MTN SP was entitled to take over contracts concluded with Huge, without the latter agreeing to these being transferred to MTN SA. The matter was set to go to court later this month.
MTN SP approached the court to compel Huge to abide by a settlement agreement, and was seeking R30 million or, alternatively R56 million, through the South Gauteng High Court. Huge, however, argued it was still owed airtime value from the iTalk deal.
The R10 million settlement agreement was reached in August and - at the time - Huge CEO James Herbst said the company would issue 20 million new shares to raise R20 million, half of which would be used to pay MTN, and the balance to fund networking equipment, so that the company could grow "aggressively".
Huge Telecom, which measures its sales activity by the number of telephone lines that it sells and installs, has grown its base from 20 000 to 25 400 between the end of February and the end of July. This represents growth of 65%, and it has also increased its average contract length from two years to 29 months.
Herbst explained that the company is spending between R2 million and R3 million to boost the number of lines it connects each month, and the additional R10 million raised - at 100c a share - will be pumped into network equipment so it can accelerate its connections.
In its latest business update - issued yesterday - Huge Telecom says it "continues to enjoy high levels of sales activity, achieving another record month in August, and has now sold 6 800 new telephone lines since the commencement of the current financial year".
It adds that, with the settlement of the MTN SP dispute, which had been the main remaining area of uncertainty, and management's continued focus on the new business model, "the board's view is that a solid foundation has been laid in order to grow the business".
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