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10 December 2014

Settlement of Arbitration Proceedings and Litigation: Telkom SA SOC Limited and Blue Label Telecoms and others

In June 2011, arbitration proceedings were instituted by Africa Prepaid Services Nigeria Limited (“APSN”) against Multi-Links Telecommunications Limited (“Multi-Links”) under the auspices of the Arbitration Foundation of South Africa.  APSN is a subsidiary of Blue Label Telecoms Limited (“Blue Label”).  Multi-Links is a former subsidiary of Telkom SA SOC Limited (“Telkom”).  APSN claimed payment of the sum of US$457 million against Multi-Links arising out of the termination of the Super Dealer Agreement between Multi-Links and APSN, in relation to the distribution of Multi-Links’ products and services by APSN, in Nigeria.  Multi-Links counterclaimed against APSN for payment of the sum of US$123 million.
Telkom and Multi-Links subsequently obtained a stay of the arbitration proceedings and instituted an action against Blue Label, Africa Prepaid Services (Pty) Ltd (the immediate holding company of APSN) and certain individuals, including Mr Mthunzi Mdwaba and Mr Thami Msimango for payment of the sums of US$528 million and the sum of US$196 million respectively.  In the action APSN counterclaimed against Telkom and Multi-Links for payment of the sum of US$457 million. 
Today, the parties to both the arbitration proceedings and the action announced that they have agreed to settle their disputes on the basis that all claims and counterclaims are withdrawn and each party will be responsible for the payment of their own costs. 
In terms of the settlement all of the parties have agreed to withdraw all allegations of any wrongdoing which they made against each other in the course of advancing their various claims, counterclaims and defences. 
The Chairman of Telkom, Mr Jabu Mabuza and the Chairman of Blue Label, Mr Larry Nestadt, said they are pleased the disputes have been amicably resolved.

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Pynee Chetty

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Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

  • fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
  • fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
  • interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
  • fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
  • Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
  • W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
  • mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
  •  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
  • other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.