Chinese telecoms infrastructure company ZTE is trying to sever ties with its local partner over a legal dispute.
ZTE SA CEO Cris Fuentes says the Chinese group, which is a minority shareholder in ZTE Mzanzi, has been forced to terminate its relationship with the local firm. He says the Chinese company has tried several times to reach “an amicable settlement” with ZTE Mzanzi, but has been unsuccessful.
In March, ZTE Mzanzi successfully asked a court to stop Telkom from rolling out a R13 billion network upgrade. ZTE SA has indicated that its Chinese parent had no role in the action and that it would file papers to have the interdict set aside.
ZTE, which has a minority stake in ZTE Mzanzi, and ZTE SA issued a statement in which the companies distanced themselves from ZTE Mzanzi's court action. The companies said they did not support the action against Telkom.
“These legal proceedings were instituted without ZTE's approval and without the approval of its representative on the board of ZTE Mzanzi.”
Fuentes says the lack of authorisation from ZTE to proceed with the Telkom litigation has been one of the elements that motivated its decision to sever ties. He says the “main reason” is a lack of consultation with ZTE in Hong Kong, as minority shareholder, in key decisions of the company.
ZTE Mzansi, 40%-owned by China-based ZTE, went to court over the Telkom deal, because it believed Telkom's bidding process was not fair and the company's tender was never properly considered, despite complying with all of Telkom's requirements, including empowerment and technical capability.
ZTE Mzanzi is challenging the separation bid and is set to file its affidavit today in the North Gauteng High Court, says Fuentes. “Concerning Telkom, we are still considering the options which are opened to us, since this litigation was initiated in violation of our rights, as minority shareholders.”
ZTE Mzansi director Tumi Magasa says the company will defend the action in court. He says Mzanzi paid “millions” in terms of the supplier agreement, and it is governed by an agreement that includes arbitration in the event of a disagreement.
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