The north Gauteng high court has dismissed a case against Telkom, which could have seen the fixed-line operator pay up to R1,7bn to black-led telecommunications infrastructure provider Bihati Solutions.

The case relates to a multibillion-rand tender Telkom put out in 2007 calling on contractors to help the company expand its network ahead of last year’s soccer World Cup.

Bihati and five other companies were shortlisted as the “conditional” winning bidders for a deal estimated to be worth R2,7bn.

One of the unsuccessful bidders complained that Telkom failed to follow due process in awarding the tender.

Telkom then put the process on hold while it consulted legal counsel. “The issues that were considered included the validity period of the tender and the date of the award in light thereof,” Telkom lawyers said at the time.

The operator applied to the courts to review its decision to award the tender.

However, Bihati argued that it had been left out of the loop and accused Telkom of stalling the process in a bid to sideline Bihati from the contract. In the middle of last year Bihati decided to take the matter to court. It wanted Telkom to abide by its commitment to begin the contract or pay it the amount it would have earned as a successful bidder.

The five other bidders shortlisted for the contract joined Bihati’s lawsuit, with Telkom filing a counterclaim contesting the suit. The case was heard in November last year with judgment held over until this year.

According to court papers, the winning candidates were notified by Telkom and asked if the deadline for final selection could be extended. However, as a partially government-owned company, if Telkom does not select winning bidders by deadlines it sets in its tenders it has to reissue them.

Telkom’s argument against Bihati’s claim was that the validity period of the tender had expired before it awarded the tender.

Bihati argued the process was valid and that it should be compensated for the time and money it lost preparing to carry out the contract, which it says was in the final phases of negotiation before Telkom halted the process.

In his lengthy ruling, high court judge Brian Southwood says Telkom was in breach of tender protocol and should have canned the tender and started the process again from scratch.

However, Southwood says Telkom’s last-minute decision to halt the tender process is the reason it has managed to dodge the R1,7bn claim from Bihati.

Southwood says the law dictates that because Telkom’s tender process was flawed, the group must set aside the original awarding of the tender.

He says Bihati did not manage to prove the case that the drawn-out tender process financially prejudiced it and so he dismissed the company’s case. Bihati, and co-applicant in the case, Merid Trading, are to pay Telkom’s costs in the matter.

Bihati marketing executive Malikhanye Mabane says the company is meeting with Telkom this week and could not comment until those discussions were concluded. — Candice Jones, TechCentral