Turkcell resumes R43bn lawsuit against MTN

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Turkcell Iletisim Hizmetleri has resumed its $4.2 billion (R43bn) damages claim against MTN Group, Africa’s largest telecommunications firm, this time in the South Gauteng High Court, where it filed papers earlier this week.

The lawsuit was a continuation of the legal process that it initiated and abandoned in the US, Turkcell said yesterday.

It is alleging wrongful and intentional interference by six defendants, including MTN Group, MTN International Mauritius, MTN Limited and MTN International. Former executives Phuthuma Nhleko and Irene Charnley are listed as the fifth and sixth defendants.

Turkcell is also claiming, in alternative to the first claim, that MTN engaged in corruption and bribery. “Turkcell was awarded Iran’s first private GSM licence in 2004 but was unlawfully prevented from receiving the licence. Iran entered into a licence agreement with MTN. Information received by Turkcell indicates that our company’s exclusion, and the signing of the licence agreement with MTN, was a consequence of MTN’s illegal acts, including bribery and corruption in 2004 and 2005. Turkcell was made aware of the situation in late 2011 and acted promptly,” it said.

The action could further distract MTN, which has battled tough trading conditions and upheaval in its executive ranks during the year. MTN said it noted reports that Turkcell had filed the suit but at this stage was unable to comment further because it had not received or viewed the court papers.

“Although we don’t have the details of the case, MTN continues to believe that there is no legal merit to Turkcell’s claim and will accordingly oppose it,” the company said.

The amount sought does not come close to even a quarter of MTN’s R365bn market cap at yesterday’s closing price, but the lawsuit is likely to create reputational damage. The stock rose 0.94 percent to R196.98.

Five months ago, Turkcell dropped the case in the US after a Supreme Court ruling barred foreign companies from suing in its courts over disputes emanating from abroad. The ruling was without prejudice to the merits of Turkcell’s case and it promised to re-file elsewhere.

Turkcell may have better success in South Africa. Grant Herholdt, a director at Edward Nathan Sonnenbergs, said: “In terms of South African law, a court will have jurisdiction over a matter if the defendant ‘resides’ within its jurisdiction. If the company’s main business is carried on in a particular jurisdiction, it will be deemed to reside within that jurisdiction.”

The case is unlikely to be heard next year. Eric van den Berg, a partner at Fasken Martineau, the law firm representing Turkcell, said a trial date would be set depending on the process “but definitely not before the end of next year”. A plea would be due in about two months, Van den Berg said.

In the summons, Turkcell claims a valid contract was in place between the Turkcell Consortium and the Ministry of Communications and Information Technology in Iran after the consortium was selected as the successful bidder for Iran’s first private licence for a GSM network, and paid the necessary fees.

Nhleko and Charnley, acting alone and or in concert, alternatively other representatives of MTN, interfered in the contract “with intention of inducing the Iranian government to prevent the first and second plaintiffs from receiving the GSM licence and to award it instead to a consortium of which the second defendant would be a part”.

Turkcell alleges MTN used “existing relationships with the South African minister of defence, the South African president and the South African ambassador to Iran with the aim of exerting influence over individuals and the Iranian government to cause the latter to renege on its commitments to the first and second plaintiffs”.