Sale of Multilinks mobile unit under threat by Helios lawsuit, report says

24 May 2011

Nigerian newspaper This Day reports that the acquisition of Multilinks’ CDMA mobile business by Visafone Communications could be called into question following the disclosure of a court injunction that prevents the sale of the telecoms firm. The injunction relates to a dispute between Telkom South Africa-owned Multilinks and Helios Towers, which constructed the telecoms towers rented by the operator. According to the report, three years into a ten-year agreement between the pair, Multilinks claimed that the contract was not binding or enforceable because it had not been signed by a government official. Helios – alleging breach of contract – took the matter to court, seeking USD250 million in contractual payments from Multilinks. Last year Helios was awarded an injunction barring the sale of Multilinks until the dispute was settled, which Telkom allegedly failed to disclose before the acquisition of Multilinks’ mobile unit by Visafone was concluded. A Visafone spokesperson told This Day that the company was surprised at the development, but was meeting with Multilinks officials to discuss the problem.

CommsUpdate reported last month that Telkom had entered into a binding agreement to sell Multilinks’ mobile unit to Visafone for an enterprise value of USD52 million. The South African telco bought its initial 75% stake for USD280 million in May 2007 and purchased the remaining 25% in January 2009 for USD130 million. After failing to turn around the fortunes of the ailing company, however, Telkom wrote down the value of Multilinks by ZAR5.2 billion (USD751 million) in the financial year ended 31 March 2010, and announced in November that it was looking to exit its struggling Nigerian unit.

Nigeria, Multi-links, Telkom South Africa, Visafone Communications