Telkom has run into fresh trouble in attempts to sell the wireless arm of its troubled Nigerian subsidiary, Multi-Links, to that country’s Visafone.
On Tuesday, a Nigerian high court found in favour of Helios Towers in a dispute over the validity of a site lease agreement between the tower management company and Multi-Links. Settlement of the dispute is one of the conditions that must be fulfilled before the sale can proceed, Telkom says.
The operator warned shareholders in a statement issued via the JSE’s news service that the Lagos high court had found in favour of Helios Towers and said it was “reviewing the implications of the judgment”. “All options will be considered,” Telkom said in the statement.
Helios Towers is suing Multi-Links for US$252m over an “anticipatory breach of contract” related to a 10-year agreement between the companies. Telkom has said the agreement remains in force, at least for now. Helios wants to stop Telkom from selling Multi-Links’s wireless assets to Visafone until the dispute is resolved.
Telkom said in early April that it had reached an agreement to sell Multi-Links’s code division multiple access (CDMA) network to Visafone for an “enterprise value” of $52m. Visafone also operates a CDMA network in Nigeria, a market dominated by companies that run networks using a rival technology called GSM.
Multi-Links has proved to be a noose around Telkom’s neck. The JSE-listed telecommunications group has sunk hundreds of millions of dollars into the business, which continues to lose money.
Telkom announced the high court’s decision after the markets closed on Tuesday, so the full impact on its share price will only be known on Wednesday morning. The group is due to publish its annual results to 31 March 2011 on Monday — Duncan McLeod, TechCentral