Telkom is set to pay out $80 million - or about R605.5 million - after a nine-year-old breach of contract dispute with US-based Telcordia was finally settled.
The US telecommunications company initiated proceedings in 2001 when Telkom cancelled a contract with it to supply, install and integrate a customer care management system.
Yesterday, the fixed-line operator told the market that the arbitration proceedings had been wrapped up. Telcordia was claiming $128 million and interest, but the parties settled on $80 million.
After Telkom cancelled the deal, Telcordia put in a claim for $178 million and interest. Several arbitration hearings occurred in 2008 and 2009, and the arbitrator decided in favour of Telcordia on 11 June.
However, although the claim was reduced to $30 million after the lengthy arbitration proceedings, the question of costs had to be settled, and Telkom will also pay damages and interest on the award amount.
Telkom had previously put aside $77 million in its financial accounts to settle the dispute with Telcordia, which provides telecommunications software and services for IP, wireline, wireless and cable networks.
Speaking during the company's recent financial results presentation for the year to March, which was published last month, Ouma Rasethaba, Telkom's chief of corporate governance, explained the claim was reduced from $178 million to $128 million and finally to $30 million. “The nine-year fight was worth it.”
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