for the year ended 31 March 2016
Matters before Icasa
End-User and Service Charter Regulations
In 2011, allegations were made at ICASA's Complaints and Compliance Committee (the CCC) regarding Telkom’s alleged non-compliance with the requirements of the End-User and Service Charter Regulations relating to the clearance of reported faults. The CCC heard the matter and ruled that Telkom is not in breach of the Regulations and recommend that ICASA review the regulations. Telkom has initiated administrative review proceedings seeking to set-aside the applicability of the Regulations since the CCC ruling is not binding on ICASA and the risk remains for similar referrals. The review application is in process and no hearing date has been allocated as yet. ICASA promulgated the Amended End-User and Subscriber Charter Regulations 2016 on 1 April 2016 and we are currently assessing the impact that the new regulations will have on the review proceedings and Telkom going forward.
High court
Neotel/Telkom : CCC
Neotel requested Telkom to provide access to Telkom’s local loop in November 2010. Telkom declined the request and Neotel submitted a formal complaint to the CCC which made an order directing Telkom to provide Neotel access to Telkom’s local loop. Telkom launched an interim relief application in the High Court for an order that the CCC order should not be implemented pending the outcome of a review application in the High Court to review and set aside the CCC order. The parties have since reached an agreement in terms of which Telkom withdrew its application for interim relief and ICASA in turn undertook not to implement the CCC order pending the outcome of Telkom's application for review. No date has been set down as yet for the hearing of the review application.
Radio Surveillance Security Services (Pty) Ltd (RSSS) In December 2011, RSSS served a summons on Telkom for the sum of R216 million.Telkom is defending the matter and has filed a plea and counterclaim for R22 million. RSSS is relying on a quotation which it gave to a former Telkom employee. There was no written contract.No purchase orders were issued by Telkom to RSSS.There is also no acceptance of the quotation by Telkom. The matter is set down for trial from 30 May 2016 until 10th June 2016 in the North Gauteng High Court.
Phutuma Networks (Pty) Ltd (Phutuma) In August 2009 Phutuma served a summons on Telkom, claiming for damages arising from a tender published by Telkom in November 2007, claiming damages in the amount of R5,5 billion. The High Court granted absolution from the instance, in Telkom's favour. The Supreme Court of Appeal (SCA) had initially dismissed Phutuma's application for leave to appeal in October 2014. On 4 November 2014, the SCA rescinded its order granted in October 2014. In early 2015, the SCA referred the appeal back to the full bench of the North Gauteng High Court. The appeal has been set down for hearing in September 2016.
Other
Section 197: Labour Relations Act
Telkom invoked a process in terms of Section 197 of the Labour Relations Act, in a bid to outsource certain services as going concerns. Section 197 (7) states that Telkom and the new employers are jointly and severally liable to any employee who becomes entitled to receive a payment a result of the employee’s dismissal for a reason relating to the new employer’s operational requirements or liquidation or sequestration. Telkom will be held liable for a period of 12 months after the date of transfer, which may result in an onerous obligation.
Contingent assets
Tax matters
As noted in the 2014 consolidated annual financial statement the tax treatment of the loss that arose in 2012 and 2014 financial years on the sale of foreign subsidiaries are based on a specific set of circumstances and a complex legislative environment. A tax refund received during the prior financial year, relating to the 2012 sale, is contingent and will only be recognised once the matter has been resolved with SARS. Refer to note 19.