JSE-listed electronics giant Reunert is suing former employee John Holdsworth and his start-up mobile offering, AppChat, over an alleged breach of contract.
Reunert wants to stop Holdsworth from launching the new offering, which is set to disrupt the market by offering voice over 3G when it goes live in October, undercutting on-net calls by as much as 80%.
However, the JSE-listed company says Holdsworth, founder and former CEO of ECN Telecommunications, is breaching a termination agreement and his contract of employment by launching a new telecoms company.
Reunert said it would buy ECN in March last year in a bid to drive convergence across its Nashua business units. In July last year, Holdsworth stepped down as CEO, a month after Reunert's R171.9 million bid to buy it went through.
Holdsworth, a “major shareholder” in ECN, started the company in the first quarter of 2005 to take advantage of a shift to voice over IP. He became non-executive chairman in July, but left the company's employ in November.
Urgent bid
In a statement to shareholders released yesterday, Reunert said it had instituted proceedings against Holdsworth to enforce a restraint of trade agreement he signed when leaving ECN.
“Reunert seeks to enforce contractual restraint of trade and confidentiality undertakings given by Holdsworth in favour of Reunert, following its acquisition of the ECN Telecommunications business in June last year,” says the statement.
The listed company has filed papers in the North Gauteng High Court, asking the court to urgently stop Holdsworth from launching AppChat. Papers were served on Monday night and Holdsworth will now have to file an answering affidavit before a date is set.
ITWeb understands that Holdsworth's restraint of trade barred him from going back into the telecoms sector until April this year. In addition, a source says a number of staff have left Nashua ECN to go to AppChat, which is problematic for ECN.
Alternative offering
AppChat, which claims to be SA's first end-to-end IP-based mobile network, is set to be launched by Holdsworth this October. Founded this year, it is rolling out a national next-generation network with points of presence in all the major centres countrywide.
Holdsworth has injected the initial, undisclosed, capital amount, but will bring in a third-party equity or network partner when “appropriate”.
AppChat bought out a company called Altivex, which gives it access to ECS and ECNS licences. Holdsworth says the licences will be used to build a core network, while the last mile will be leased.
ECN MD Andy Openshaw says the company believes there are a number of issues that give ECN a strong footing. He says further clarity will be provided once documents become public.
Holdsworth says the matter is subject to a legal process and he cannot comment other than to say that AppChat will oppose Reunert's application.
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