In an ongoing case against Telkom, Phuthuma Networks now believes its claims could amount to up to R11 billion if successful.
However, the company argues that Telkom is deploying delay tactics that could see the smaller company cave under high litigation costs. Telkom remains steadfast in its refusal to comment on the matter, maintaining that it does not litigate in the media.
According to Phuthuma Networks director Dr Ed Scott, it is due to the delay tactics that the company has appealed to president Jacob Zuma to intervene in the matter.
Phuthuma Networks is suing Telkom over a tender published in November 2007, for the outsourcing of Telkom's Telex and Gentex Services, and to provide a solution to support its maritime industry requirements, the fixed-line operator says. It has also instituted claims against the telecoms giant at the Competition Tribunal and the communications regulator.
Telkom cancelled the tender last June without awarding it, as the validity period of 180 days had lapsed. The company says it is defending the action, which is set to go to court on 17 February.
Govt involvement
He says Phuthuma's decision to appeal to government was motivated by Telkom's lack of adherence to government governance principles. According to Scott, Telkom is in violation of the Electronics Communications Act, the Broad-Based Black Economic Empowerment Act and the Independent Communications of SA Act.
The presidency has since tasked the communications minister with looking into the merits of Phuthuma's allegations.
ITWeb previously stated it is unclear why Phuthuma would lobby for government intervention since it had already secured hearing dates at the high court, the Competition Tribunal and the Independent Communications Authority of SA.
Scott maintains that if successful in all three claims, the damages owing to Phuthuma could amount to between R10 billion and R11 billion; significantly more than the original R1.8 billion claim.
The Phuthuma director remained non-committal when questioned as to what the objective of lobbying for government intervention would be at this late stage, especially since court hearings are scheduled to begin in mid-February.
However, Paul Jacobson, attorney at Jacobson Attorneys, speculated at the time that Phuthuma may be seeking an out of court settlement in the matter.
Scott says the company has not ruled out the idea of a settlement, but reiterated that its reasoning for involving government was to highlight government's governance breaches at Telkom.
Nonetheless, Scott states that, since 2003, Phuthuma Networks had racked up R34 million in losses, thanks to Telkom. The nature of these costs, however, is unclear.
Telkom confident
Meanwhile, Telkom previously explained it had not included a provision in its year-end financial results for Phuthuma's claim, because it believes the case has little merit.
“Telkom's external legal representatives have assessed the merits of the Phuthuma claim(s) and have advised Telkom that the probabilities of success of the entire claim are very low, taking cognisance of the history and facts of the matter.
“The probabilities are such that no provision is required, according to the factors one takes into account when deciding whether to make a provision or not. This is so because, even if there is an amount to be paid, it would probably not be of a material nature and hence no provision is required,” Telkom stated.
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