African Prepaid Services Nigeria (APSN), a now-mostly-dormant company in which JSE-listed Blue Label Telecoms has an effective 37% stake, is claiming US$481m, or about R4bn at the prevailing exchange rate, in damages from Multi-Links, Telkom’s former Nigerian subsidiary, after Multi-Links walked away from a lucrative, 10-year contract with the company.

Multi-Links has filed a counterclaim of $123,9m.

Though Telkom has sold the Multi-Links business — the sale to Hip Oils Topco became effective in October — part of the agreement of sale stipulates that the JSE-listed telecommunications group must accept liability for “certain litigation claims” against Multi-Links if these claims exceed $10m.

However, Telkom said this week it was “not considered probable” that the claims would exceed $10m and also that it had filed a counterclaim against APSN. Telkom had not responded to a query from TechCentral by the time of publication seeking details for its reasons for filing the counterclaim. However, it has said APSN has filed its defence to the counterclaim.

Arbitration between the parties is set down for hearing for a year from now, from 5 November to 14 December 2012.

Blue Label Telecoms’ head of investor and media relations, Michael Campbell, says confidentiality agreements preclude him from providing detailed information about the dispute. What he will say is that APSN has sold most of its assets and is now little more than a shell company after it lost Multi-Links as its primary customer.

In June, Blue Label said it had decided to terminate its business activities in Nigeria on the back of the cancellation of the Multi-Links contract. This would allow it to “redeploy” its resources to its other international businesses, in particular India and Mexico, co-CEO Mark Levy said at the time.

Blue Label has an effective 36,7% stake in APSN by virtue of its 72% shareholding in Africa Prepaid Services. APSN signed a 10-year contract with Multi-Links in 2008 for the exclusive distribution of its wireless products to the Nigerian market.

Telkom has lost billions of rand through its investment in Multi-Links, which owns a CDMA (code division multiple access) network in a market thoroughly dominated by companies that operate networks based on GSM, a rival technology. — Duncan McLeod, TechCentral