The High Court has set down a tentative date to hear Telkom's lawsuit against several defendants the company says misled it into staying with its unprofitable Nigerian operation, instead of exiting the business and cutting its losses.
Telkom filed the suit in May last year, in the North Gauteng High Court, citing six defendants, including Blue Label Telecoms, Africa Prepaid Services, Africa Prepaid Services Nigeria (APSN), Blue Label COO Mark Pamensky, ICT veteran Mthunzi Mdwaba, and former Telkom executive Thami Msimango.
According to Telkom, the "trial has tentatively been set down for hearing from 10 August 2015 until early November 2015".
The case centres on the fact that Telkom would have pulled out of its loss-making Nigerian operation three years earlier, had it not been misled into signing a 10-year deal that it thought would bolster revenue.
Subsequently, Telkom and its former Nigerian subsidiary, Multi-Links, are suing for R7 billion in damages, arguing breaches of fiduciary duty by Msimango and misrepresentations by Blue Label. It alleges the misrepresentations were designed to cause Telkom to continue pumping money into the bleeding Nigerian company after December 2008.
Telkom claims it suffered damages of $528 million in the form of loans to Multi-Links that are irrecoverable and were made between December 2008 - when it would have pulled out were it not for the deal - and October 2010. Multi-Links, the second plaintiff, has suffered damages of $196 million because it paid Blue Label's Nigerian subsidiary under a deal the court papers argue yielded no value.
In March 2007, Telkom bought 75% of the CDMA operator, for $280 million, and almost two years later, bought out the balance for another $130 million. The company says in its filing that Multi-Links performed poorly between when it initially invested and November 2008, to the point where its performance was below the business plan.
Telkom sold the unit in October 2011, making a large loss, after having written the unit down for more than its initial investments. Under the deal, Multi-Links outsourced its entire sales, marketing and distribution function to APSN. The deal was seen as vital to fixing the flagging Multi-Links operation, which was a precondition of Telkom investing more into it.
The company also argues the 10-year super dealer agreement with Blue Label was inked as it was seen as essential for Multi-Links' continued survival. Were it not for the agreement, Telkom would have sold out of the operation by no later than December 2008.
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