Telkom's controversial microwave tender may face yet another legal hurdle as embattled black empowerment business, Maredi Telecom and Broadcasting, prepares its next assault.
Speaking to ITWeb this morning, Maredi chairman Lance Manala explained the company was looking into other legal options, after the Pretoria High Court dismissed its interdict application to halt the tender awarded to Ericsson.
Despite the denied application, the High Court made some pronouncements about the tender. It said it should never have been awarded to Ericsson, primarily because it did not pass the initial test phase during the tender application.
Where to?
Presiding judge Brian Southwood said in his ruling: “It seems clear that, whether it was faulty test equipment or faulty tender equipment, Ericsson failed the physical test phase and for that reason alone should have been disqualified from the tender.”
The court also implicated suspended Telkom executive for network provisioning, Marius Mostert, in the irregular awarding of the tender. “It also seems clear that there were improper communications between Ericsson and Marius Mostert, which probably resulted in Ericsson having a second opportunity to demonstrate its equipment.”
Mostert was suspended in March, without full explanation from Telkom, which only indicated the suspension was pending an internal investigation and disciplinary hearing.
Manala says the ruling created mixed feelings for the company, since it vindicated its standing on the tender, but gave it no recourse to prevent the deal being awarded to its competitor.
Telkom says: “It is abiding by the decision of the court and has no further comment in this regard.”
While the court did not directly prevent the process going forward, Maredi feels the judge's discussion should at least have led Telkom to investigate the process.
It appears as though Telkom will go ahead and award the tender regardless of the controversy surrounding it. A source close to the procedure says the process has been restarted, and Telsaf and Ericsson will be awarded the tender.
The source also says contracts and order placements can now be finalised.
Second chance
Maredi first voiced its complaints against Telkom at the end of last year after Telkom awarded a joint tender to Telsaf Data and Ericsson to provide point-to-point split mount radio equipment. The company's gripe is that Ericsson failed the test phase of the tender process and was given a chance to try again.
According to Manala, Maredi's tender bid was dismissed, with Telkom saying it did not meet the tender requirements. The small broadcasting business is concerned, since it believes the technology it planned to use has 35% global market share - a figure which reportedly equals that of the Ericsson equipment.
“Besides, if Ericsson was given a second chance to prove itself, then why didn't Maredi get one?” he says.
The multinational company was subsequently awarded the business, which is rumoured to be valued at around R2 billion.
Rubbing shoulders?
The equipment is expected to link Telkom's backhaul services to radio towers, which the company says will improve its wireless services. The technology comes at a critical time, when Telkom is looking to build its wireless solution to grow its mobile-based business.
If Ericsson was given a second chance to prove itself, then why didn't Maredi get one?
Lance Manala, chairman, Maredi
Telkom already leases its backhaul to the mobile providers, and has started implementing its own wireless services in the form of Do3G.
Maredi still believes Telkom has close ties with Ericsson's senior management, claiming proper procedure was not followed. The company attempted to have the process halted by taking it to the High Court; however, the court dismissed the claim with costs.
Telkom has also had a long-standing relationship with Ericsson, with the companies' partnerships extending as far back as 1996. Manala says it always believed it was second in line after Telsaf to be awarded the joint-tender, and was discredited to make way for Ericsson.
Other problems
This is the first of several irregular tender allegations Telkom faces. Accusations surfaced earlier this month attacking Telkom's tender processes over telex machines supplied to the post office.
Phutuma Networks, a 51% black-owned business, says it has been working towards winning the reputed R1.5 billion tender since 2003. According to documentation provided by Phutuma founder and director, Ed Scott, the tender was officially opened in 2005 and was later pulled, only to be offered two years later as an outsourcing project.
Telkom has a contract to supply telex machines to the post office until 2015. Phutuma has gone on to accuse Telkom of rigging the process, allowing a competing bidder to work on the project without tender and entrench itself in the business.
Tightening control
While Telkom has declined to make extensive comment on the Maredi dismissal, its new CFO, Peter Nelson, indicated in an earlier interview that the tender process is being tightened.
He said earlier this month that all processes are now being passed across his desk and would be closely scrutinised.
Nelson was not pleased by the public spectacle caused by the two tender accusations, since the company is in the process of a controversial restructuring process, which has seen at least one executive pink-slipped.
He slammed media reports on the Phutuma tender allegations, saying it is not a news story. Nelson said a complaint from Phutuma passed across his desk early in the year, and all processes around the telex tender have been halted for investigation.
“The telex tender has not been awarded and will not be until all queries around the process have been fully investigated.” He also noted that the cost of the tender was nowhere near R1.5 billion, and was closer to R10 million over the five-year contract period.
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