Nigeria: Setback for Multilinks sale as court rules Helios contract is valid
Reuters reports that the sale of Multilinks’ mobile unit has suffered a setback following a ruling by the Lagos High Court that disputed lease agreements between the Telkom South Africa-owned operator and local tower building company Helios Towers are valid. The decision could delay the sale of Multilinks’ CDMA mobile unit to Visafone Communications, announced in April 2011. ‘The Lagos High Court in Nigeria found in favour of Helios Towers Nigeria in the matter regarding the validity of … site lease agreements between Multilinks and Helios,’ Telkom said in a statement, adding it would need to resolve the dispute before it could complete the sale of the unit.
Helios, which is backed by private equity group Helios Investment Partners and South Africa’s Shanduka Group, is suing Telkom for at least USD251 million, claiming the South African firm walked away from a ten-year rental agreement after just three years, claiming that the contract was not binding because it had not been signed by a government official. Helios – alleging breach of contract – took the matter to court, and stated that it was awarded an injunction last year barring the sale of Multilinks until the dispute was settled.
As previously reported, Telkom entered into a binding agreement to sell Multilinks’ mobile unit to Visafone for an enterprise value of USD52 million in April 2011. The South African telco bought its initial 75% stake for USD280 million in May 2007 and purchased the remaining 25% in January 2009 for USD130 million. After failing to turn around the fortunes of the ailing company, however, Telkom wrote down the value of Multilinks by ZAR5.2 billion (USD751 million) in the financial year ended 31 March 2010, and announced in November that it was looking to exit its struggling Nigerian unit.