Telkom facing massive damages payout
It faces a R2.1-billion claim from Telcordia Technologies after backing out of a 1999 agreement to buy software from the company.
On Friday, Telkom spokesman Lulu Letlape confirmed that negotiations to determine an amount payable are currently under way.
This forms part of an arbitration process that was instituted once Telkom had exhausted and lost all legal avenues in SA and abroad to defend the claim.
Letlape said: “If the arbitrator awards an amount of more than 70-million, it is expected to have an effect, but Telkom does not expect the effect to be a materially adverse one.”
Telkom has argued that it terminated the deal on the grounds that the system it was being sold did not include all the features it wanted and were not of the promised quality.
Attempts to resolve the dispute were unsuccessful and Telcordia took Telkom to the International Chamber of Commerce.
Telcordia made a claim of 130-million (R923-million) against Telkom for cancellation of the contract and in respect of outstanding payments that Telkom had committed itself to.
Following several court cases in SA, the matter came to an end last November when the Supreme Court of Appeal in Bloemfontein ruled against Telkom.
Now, with interest amounting to 1.5-million a month, and costs, Telcordia’s claim has grown to about 300-million.
In its latest submission to the US Securities and Exchange Commission, Telkom reported that the payout could have severe financial implications on its finances.
“Although Telkom is unable to predict the exact amount that it would land up paying, it has made provision for estimated liabilities of 70-million, including interest but excluding legal fees,” it said in the report to the US SEC.
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