Telkom loses final Telcordia appeal

Johannesburg, 22 Feb 2007

The Constitutional Court has denied Telkom leave to appeal a ruling against the fixed-line operator, deciding in favour of US-based software company Telcordia.

The dispute arose when Telkom accused Telcordia of breach of contract by not keeping to the agreed-upon specifications in the supply of a software solution to the fixed-line operator. Telcordia responded with a counter-claim.

This week's Constitutional Court decision follows a last gasp effort by Telkom to appeal against the Bloemfontein Supreme Court of Appeal's ruling in November. This ruling stated Telkom must pay damages of upwards of R1 billion to Telcordia, based on the US firm's claims.

Telkom then took the matter to the Constitutional Court.

However, its efforts to win the favour of the Constitutional Court failed. Lennard Cowan, Telcordia's attorney of record for all South African litigation matters, explains: "Telkom's application for leave to appeal was denied by nine Constitutional Court judges."

The application was submitted by way of an affidavit, he notes.

The Constitutional Court's decision effectively means the arbitration process, to determine the amount Telkom will have to pay Telcordia, can be resumed.

Cowan says dates for the arbitration hearings can now be set, and confirms Telkom has no further legal recourse to try overturn the ruling.

"So we are now proceeding with the original arbitrator, Anthony Boswood QC," he says.

Neither Telkom nor Telcordia have been willing to indicate what the damages are likely to be. However, analysts have suggested it may be substantially less than the numbers reported in the media, which range from R1 billion to R2 billion - depending on how one works out the original claim, rates of interest and currency exchanges.

Unconfirmed reports late last year said Telcordia had offered to settle the matter in exchange for a payment of about R360 million.