ZTE Mzanzi partnership goes up in flames

ZTE is dropping SA’s ZTE Mzanzi as the company’s official partner in South Africa after the two companies failed to resolve a dispute.

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Chinese telecommunications equipment manufacturer ZTE is dropping SA’s ZTE Mzanzi as the company’s official partner in South Africa, after the two companies failed to resolve a dispute.

ZTE Mzansi, a joint venture between China’s ZTE Corp and local black-owned companies, took Telkom to court in March after being disqualified from a bidding process related to Telkom’s infrastructure overhaul project.

ZTE Corp, which owns a minority share in the company, then followed with its own legal battle against its partner to get the interdict overturned, releasing a statement distancing itself from proceedings against the incumbent.

At the time, ZTE South Africa CEO, Cris Fuentes said that the court case had been brought against ZTE Mzansi because it had engaged in litigation against Telkom SA without consulting the group – an action which Feuntes said was “contrary to the agreement” entered into by the partnership.

He told BusinessTech that the company would be “reconsidering” its relationship with Mzanzi, but hoped to “resolve the matter amicably.”

Partnership ended

However, after failing to reach a settlement, ZTE has terminated its partnership with ZTE Mzanzi.

“After several intents to reach an amicable settlement with ZTE mzanzi, ZTE HK, as shareholder of ZTE Mzanzi, has been forced to notify the termination of the agreements entered into with ZTE Mzanzi,” said Cris Fuentes.

“The absence of authorisation from our side to proceed with the Telkom litigation has only been one of the elements which motivated our decision, the main reason being the lack of consultation of ZTE HK, as minority shareholder, in key decisions of the company,” he continued.

The decision to end the partnership has been challenged by ZTE Mzanzi before the Pretoria High Court, which will be heard next week after ZTE Corp files an affidavit tomorrow (10 May 2012).

ZTE Corp is also still considering its options with Telkom, “since this litigation [between Telkom and ZTE Mzanzi] was initiated in violation of our rights, as minority shareholders,” concluded Fuentes.

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Telkom back in court

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