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Telkom halts president’s bid for SIU probe into company

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 20 Jul 2023
President Cyril Ramaphosa.
President Cyril Ramaphosa.

Telkom has won its court case against president Cyril Ramaphosa over his directive that authorised a wide-ranging probe of possible maladministration in the disposal of Telkom’s assets – iWayAfrica, Africa Online Mauritius and Multi-Links Telecoms – during the telco’s sojourn in Africa.

The 2022 order gave the Special Investigating Unit authority to investigate possible maladministration in the sale of these assets, which resulted in the telephony company losing millions of rands.

Telkom is majority state-owned, with the South African government owning 40.5% of the JSE-listed company.

Another 14.8% of the firm is owned by another state-owned company – the Public Investment Corporation – which is closely linked to the South African government.

Following the order, Telkom filed papers in July last year at the North Gauteng High Court to halt the probe into the company’s dealings in its African operations dating back to 2006.

In a statement today, the telco says the Pretoria High Court has set aside Proclamation 49 issued by the president on 25 January 2022, giving the authority to investigate Telkom.

Approaching the courts, it adds, Telkom confirmed its commitment to good governance.

“The allegations in the proclamation had already been addressed by the company through Telkom’s corporate governance processes and the outcomes are of public record,” says Telkom group CEO Serame Taukobong.

According to the company, Telkom approached the courts because it is of the view that left unchallenged, the proclamation would set a dangerous precedent on the role of the state in private enterprise.

In delivering the judgement, it notes, Judge J Thlapi found the decision to issue the proclamation to be unconstitutional, invalid and of no force or effect.

“Telkom consistently upholds the principles of good corporate governance. It is unfortunate that Telkom needed to approach the courts on this matter and we hope that this judgement brings it to finality,” Taukobong says.

Telkom sold Multi-Links, its CDMA unit, to HIP Oils in 2011 at a large loss after a long legal battle.

The telecommunications company bought 75% of the CDMA operator for $280 million in March 2007, and almost two years later, bought out the balance for another $130 million. It subsequently wrote down the unit for more than its initial investments before selling it.

It was not immediately clear how much Telkom had spent on legal fees, as the company did not disclose this amount.

As for the iWayAfrica and Africa Online Mauritius assets, Telkom offloaded the businesses through a private sale to Gondwana International Networks.

iWayAfrica was formed as the result of the amalgamation of MWeb Africa and Africa Online in 2007, when MWeb Africa was purchased by Telkom.

The iWayAfrica business operated in eight countries in Africa, offering terrestrial wireless and VSAT services to business and residential markets, as well as via its channel partners in many other countries on the continent.

Telkom struggled to drive growth and profitability in the iWayAfrica business, resulting in the sale.

“Several years of poor performance of the iWayAfrica Group has resulted in continued negative earnings before interest, taxes, depreciation and amortisation contribution to the Telkom group,” said Sipho Maseko, who was CEO at the time.