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Altron scores victory in multibillion-rand broadband contract battle

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Mteto Nyati Altron's chief executive.
Mteto Nyati Altron's chief executive.

Altron Nexus has scored a major victory at the Supreme Court of Appeal, receiving  the unanimous backing of the court over the City of Tshwane Municipal Broadband Network contract.

The long-running battle pitted the City of Tshwane (COT) against Thobela Telecoms, a special purpose vehicle, in which Altron Nexus is a minority shareholder.

The case, which began in 2016, has seen the COT take the matter for judicial review after allegations of impropriety surfaced.

Altron then received a lifeline in September last year when the company was granted leave to appeal, heading to Bloemfontein to ask the court to review a High Court judgement that set aside the multibillion-rand contract.

Today, the court found there was no basis for finding any possible maladministration or mismanagement of Altron Nexus.

The SCA ruled that the COT and its officials were solely to blame for its predicament.

In a statement to shareholders, Altron says: “The ruling confirms that the broad contract is in force and should be resumed without any further delay. The original contract was for three years, with an additional 18 years for an operate and maintenance contract.

“Altron Nexus will be able to recover all its costs and any amounts outstanding under the contract.”

The COT subjected the multibillion-rand broadband contract to judicial review after discovering what it says were serious irregularities, which "taint the legality of the deal".

The incumbent administration in Tshwane, led by the Democratic Alliance, instituted an investigation into the procurement process of the deal after the auditor-general (AG) found the contract to be irregular.

The AG's report also determined the value of the contract at R2.73 billion.

Former Tshwane mayor Solly Msimanga, who led the administration at the time, contended that “the broadband contract and its procurement are riddled with irregularities and non-compliance.

"What we have discovered are serious irregularities which we believe taint the legality of the broadband deal. Crucial information was also withheld from councillors who voted on the project in April 2016."

Before the broadband tender was approved, National Treasury raised concerns about the project in February 2017.

In April 2016, city officials had put forward a request to the council to approve the contract for broadband rollout for a period of 18 years, which includes three years to build the network and 15 years to operate it.

In terms of the request, the council was asked to approve the off-take amount of R278 million, inclusive per annum, for a period of 18 years. During the build period, the off-take amount will be paid pro-rata in line with the services made available from the network, said the city. The off-take may increase if the city procures additional services not covered by the current agreement.

The off-take amount was constituted as R153 million per annum, reprioritised from the current operational budget of the ICT department, and another R43 million taken from the budgets of the three departments, namely: ICT, metro police and electricity.

The city said it would fund the shortfall of R82 million per annum required from the 2016/17 financial year as follows: R40 million in the financial year 2016/17, increased by another R42 million in the next financial year.

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