Telkom wins leave to appeal in Mzanzi case

Telkom has been granted leave to appeal in its dispute with ZTE Mzanzi, allowing it to continue with a multibillion-rand project to upgrade its access network. By Duncan McLeod.

Added by Editor on 23 May 2012.
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ZTE's Cris Fuentes

Fixed-line telecommunications operator Telkom was on Wednesday granted leave to appeal by the high court in Pretoria in a case brought against it by ZTE Mzanzi. A court interdict preventing it from continuing with work on a multibillion-rand project to modernise its access network into homes and businesses has been suspended pending the appeal.

Mzanzi, which is 40% owned by China’s ZTE, was granted the urgent interdict last month, which prevented Telkom from proceeding with work on the project with its chosen suppliers, Alcatel-Lucent and Huawei. ZTE fell out with Mzanzi over the interdict and informed it that it was cancelling its partnership agreements with the black-controlled SA company.

A Telkom spokesman confirms to TechCentral that the company has been given leave to appeal against the decision and that it may now resume work on the project. Its appeal will be heard by the supreme court of appeal in Bloemfontein. The operator says it will issue a more detailed statement to the media later on Wednesday.

The Telkom project — which could be worth as much as R13bn over five years — is being undertaken to upgrade the company’s access network, taking fibre closer to homes and businesses. This will allow the operator to offer much faster broadband connections to end users and compete more effectively against next-generation mobile broadband alternatives.

But Mzanzi took exception to Telkom’s decision to award the contract to Huawei and Alcatel-Lucent, saying the operator’s management team had failed to follow internal tender procedures and was to blame for the court interdict that prevented it from continuing with work on the project.

Meanwhile, the high court last Thursday found that ZTE could not summarily terminate its partnership agreements with Mzanzi and that the matter should go to arbitration. Mzanzi CEO Tumi Magasa says this is a victory for his company as it’s the decision it wanted from the court.

Mzanzi has been given 30 days (from last Thursday’s judgment) to lodge papers with the International Chamber of Commerce in Mauritius. If it fails to do so, the agreements will be automatically terminated, says ZTE SA CEO Cris Fuentes.

The order was given verbally by the court, with a written judgment expected to follow in the next few days.

The high court decided that the agreements between ZTE and Mzanzi must remain in effect to allow Mzanzi to bid for new business, including an upcoming and potentially lucrative network modernisation tender to be awarded by state-owned telecoms company Broadband Infraco.  — (c) 2012 NewsCentral Media

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