Telkom – Telcordia R230 million settlement

Mergers, Acquisitions and Financial Results

Telkom and Telcordia dispute may cost Telkom millions of Rands after recent settlement. A dispute between Telkom and Delaware based telecoms service provider Telcordia arose in 2001 after Telkom felt that Telcordia did not fully satisfy their delivery obligations.

The total contract value was around USD 51.8-million for voice software and USD 34.8-million for the non-voice software, but according to a court document Telkom refused to effect payment of certain moneys to Telcordia.

After a long legal battle the case was settled in Telcordia’s favour on 11 June and the ruling will cost Telkom millions of Rands. Telkom last week confirmed that Telcordia has been awarded a partial amount of USD 30,597,451(excluding interest).  This forms part of a total lawsuit of USD 128-million against Telkom.

“The question of liability for costs in the arbitration has not yet been decided by the arbitrator.  It is expected that the question of liability for costs will be determined before the end of August 2010,” said Anton Klopper, Telkom's Group Executive for Legal Services.

Klopper further pointed out that it has not been proven whether Telcordia have beaten the tender. “If they have not beaten the tender, they will be liable to pay Telkom's costs since 2007,” said Klopper.
Telkom said that they cannot divulge any more information since this is a matter of private arbitration. “The Company is dismayed that this information has been leaked to media as Telkom respects the confidentiality of private arbitration,” said Klopper.