Telkom has pulled the plug on a plan to sell the wireless division of its Nigerian subsidiary, Multi-Links, to Visafone for US$52m and will stop funding the operation with immediate effect. Liquidation may follow.

The decision to cancel the deal with Visafone, which operates a similar code division multiple access (CDMA) wireless network in Nigeria, follows hot on the heels of a Nigerian high court judgment in favour of Helios Towers in a dispute over the validity of a site lease agreement between the tower management company and Multi-Links.

Telkom Group CEO Nombulelo Moholi says the court’s decision means it is unable to proceed with the sale of Multi-Links’s CDMA business to Visafone, a deal engineered by former Telkom acting group CEO Jeffrey Hedberg. The CDMA business accounts for 90% of Multi-Links’s revenues.

Helios Towers is also suing Multi-Links for $252m over an “anticipatory breach of contract” related to a 10-year agreement between the companies. The company is also facing a similar lawsuit from JSE-listed Blue Label Telecoms.

Telkom has sunk billions of rand into Multi-Links, making it one of the biggest business failures in SA corporate history. The group has written down Multi-Links’s value to zero.

Telkom’s MD of international business, Motlatsi Nzeku, says what remains of Multi-Links — its wholesale carrier business — remains “precarious”. “What’s going to happen now is the Multi-Links board will meet and plan the way forward,” Nzeku says. The board is due to meet on Monday afternoon. “[It will decide] how we deal with Multi-Links without funding and do that responsibly, understanding the impact it has on the Nigerian market.”

Moholi says she can’t speculate where the situation will end up, but she suggests Telkom is shielded from legal action as contracts with companies like Helios Towers were signed by Multi-Links and not Telkom itself.

“I’d hope Telkom would still look at Africa as an area of growth, ensuring we do not repeat the mistakes of the past,” Moholi says. — Duncan McLeod, TechCentral