Swazi MTN Seeking Compensation for Breach of Wireless Monopoly

Mergers, Acquisitions and Financial Results

MTN's Swaziland subsidiary is seeking SZL850 million (US$100 million) in compensation from the state-owned telco, Swaziland Posts and Telecommunications Corporation (SPTC) stemming from a dispute over MTN's monopoly on mobile services.

SPTC -- which also owns a 41% stake in Swazi MTN -- launched its own mobile service in breach of their joint-venture agreement last year, although it was then forced to shut down the service following legal action by MTN.

Swazi MTN is now seeking compensation for both the act of breaching the agreement, and the losses that it claims it suffered when customers signed up for SPTC's own wireless service.

Previously, MTN had said that it did not object to SPTC launching a mobile service, but not while it is a shareholder in Swazi MTN as well. The government has looked at moving SPTC's stake in the local MTN network into a separate holding company to get around that issue.

However, it has been noted by the Times of Swaziland newspaper that the compensation claim is identical to the value put on SPTC's stake in the joint-venture, suggesting that MTN may use the lawsuit as a way of breaking the joint-venture agreement.