Telkom South Africa has announced it is cutting off all funding for its struggling Nigerian division Multilinks, after an agreement to sell the unit’s CDMA mobile unit fell through. The South African telco said that a deal agreed in April 2011 to sell the loss-making division’s mobile business to local rival Visafone Communications for USD52 million failed after certain conditions of the deal were not met. CommsUpdate reported that shortly after the deal with Visafone had been struck, local tower building company Helios announced it was suing Telkom for at least USD251 million, claiming that the South African firm walked away from a ten-year rental agreement in Nigeria after just three years. Helios, which is backed by private equity group Helios Investment Partners and South Africa’s Shanduka Group, took the matter to court, and stated that it was awarded an injunction last year barring the sale of Multilinks until the dispute was settled. While Multilinks argued that the contract was not binding or enforceable because it had not been signed by a government official, last week the Lagos High Court ruled that the disputed lease agreements were indeed valid. Meanwhile, Telkom has said it is still committed to exiting Multilinks’ mobile business.
TeleGeography’s GlobalComms Database states that Telkom bought its initial 75% stake in Multilinks 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.