Legal drama as ZTE pulls plug on partner - TechCentral

Legal drama as ZTE pulls plug on partner

Cris Fuentes

Relations between Chinese telecommunications equipment manufacturer ZTE and local partner ZTE Mzanzi appear to have broken down irretrievably.

TechCentral has established exclusively that ZTE has cancelled its partnership agreement with Mzanzi, in which it has a 40% stake, prompting the latter to file papers in the high court in Pretoria seeking an urgent interdict against its partner. The matter is set to be heard by the court on Tuesday, 15 May.

ZTE is expected to file its answering affidavit tomorrow (Friday).

“We trust the courts will see the relationship between the two parties is not repairable,” says Cris Fuentes, CEO at ZTE in SA. “We have tried everything to reach consensus with ZTE Mzanzi,” he says. “But due to this kind of attitude [by Mzanzi]… clearly there is no returning to this relationship.”

ZTE cancelled the agreement because it was “disappointed” with ZTE Mzanzi for suing Telkom in the high court in Pretoria. Mzanzi won an interdict against the fixed-line operator last month, forcing it to put a project to roll out a next-generation broadband network on hold, prompting ZTE to instruct its attorneys, Bowman Gilfillan, to apply to the high court to have the order set aside.

Mzanzi, which was a distributor and brand licensee for ZTE, wants the project, which is projected to have a value of R13bn over five years, halted while there’s a review of the decision to grant the contract to ZTE rivals Huawei and Alcatel-Lucent Technologies.

Mzanzi CEO Tumi Magasa has said previously that his company was disqualified unfairly and that Telkom’s management team had failed to follow internal tender procedures. This prompted Telkom CEO Nombulelo Moholi to say she was confident in her group’s procurement policies. Moholi expressed concern at what she called a “recent trend of challenging the awarding of key tenders in the courts” and said the practice would have “serious consequences for customers by stalling roll-out plans unnecessarily”.

Magasa declines to comment on the latest developments, saying only that “ZTE is our partner and we would not like to battle this out in the media”.

The Telkom project involves installing fibre-based distribution cabinets in streets to offer consumers much speedier Internet connections over its copper “last-mile” network.

Fuentes says ZTE is now “looking for a new partner” in SA after Mzanzi “abused” its majority shareholding in the partnership. “We believe the only way to transfer skills and have a better understanding of the landscape is to be together with a strong and hands-on partner.”  — (c) 2012 NewsCentral Media

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