In December 2008, Africa Prepaid Services Proprietary Limited (APS), a subsidiary of BLT, concluded a super dealer agreement with Multi-Links Telecommunications Limited (MLT), a wholly owned subsidiary of Telkom, at the time, in terms of which APS was appointed for a period of 10 years to market and distribute a range of products and services for MLT in Nigeria (the agreement).

In 2009, APS ceded and assigned all its rights and obligations in terms of the agreement to Africa Prepaid Services Nigeria Limited (APSN), a subsidiary of APS and BLT.

On 26 November 2010, APSN cancelled the agreement on the basis of MLT’s wrongful repudiation of the agreement.

In June 2011, APSN launched arbitration proceedings in South Africa against MLT (the arbitration proceedings). APSN claims payment of USD457 million against MLT and MLT has counterclaimed for payment of the sum of USD123 million.

Telkom sold its shareholding in MLT to Hip Oils Topco Limited on 3 October 2011. In terms of an indemnity contained in the sale and purchase agreement, Telkom is liable for all amounts in excess of USD10 million in respect of APSN’s claim against MLT.

Telkom and MLT instituted an action in the High Court against BLT, APS, APSN and certain individuals, including a former senior executive of Telkom, for payment of an aggregate amount of USD724 million (the action).

The claim in the action is based, inter alia, on an alleged breach of the duty of care and alleged misrepresentations made by BLT, together with alleged breaches of fiduciary duties on the part of the former senior Telkom executive, at the time the agreement was concluded, in respect of which it is alleged BLT was a party to.

On 6 September 2013, Telkom and MLT obtained an order from the High Court which had the effect of preventing the arbitrators from determining whether the agreement is valid and enforceable. APSN decided not to appeal against the order and submitted itself to the jurisdiction of the High Court for the purposes of defending the allegations made against it, BLT and the other defendants and for the purpose of proceeding with its claim against MLT for payment of the sum of USD457 million arising out of MLT’s wrongful repudiation of the agreement. At the same time and in the same action, APSN has advanced a claim against Telkom for payment of the sum of USD457 million arising out of Telkom’s wrongful interference with APSN’s contractual rights against MLT. To the extent that APSN is unable to recover its losses from MLT, APSN aims to recover such losses from its claim against Telkom.

BLT and the other defendants vehemently deny the allegations made against them by Telkom and MLT, and maintain that they are not liable. A trial date has not as yet been allocated.