Telkom Integrated Report 2017

151

20Contingencies

Contingent liabilities

Matters before ICASA

End-User and Service Charter Regulations

Based on ICASA’s Complaints and Compliance Committee (CCC) ruling in the prior period,Telkomhas initiated administrative review

proceedings seeking to set aside the applicability of the Regulations in issue. The review application is in process and no hearing date

has been allocated as yet. In the interim, however, ICASA promulgated the Amended End-User and Subscriber Charter Regulations on

1 April 2016, in terms of which the fault clearance measurement for fixed services was amended to 90% fault clearance within five days,

instead of three days.Telkom is in the process of assessing the impact of the amended Regulations going forward.

High Court

Radio Surveillance Security Services Proprietary Limited (RSSS)

In December 2011, RSSS issued a summons againstTelkom for the sum of R216 million.Telkom is defending the matter and has filed a

plea and a counterclaim for R22 million. No contract was concluded with RSSS, no purchase orders were issued and no quotations were

accepted byTelkom. The trial which was initially heard in May 2016 has been re-enrolled for hearing in late August 2017.

Phutuma Networks Proprietary Limited (Phutuma)

In August 2009 Phutuma served summons onTelkom, claiming damages to the amount of R5.5 billion arising from the cancellation of a

tender published byTelkom in November 2007. The High Court granted absolution from the instance, inTelkom’s favour. The Supreme

Court of Appeal (SCA) had initially dismissed Phutuma’s application for leave to appeal in October 2014. In November 2014, the SCA

rescinded its order granted in October 2014. In early 2015, the SCA referred the appeal back to the North Gauteng High Court. The

appeal, which was heard in September 2016, was upheld. A request has been made for the re-enrolment of the matter for trial. We are

awaiting a court date.

Other

Section 197: Labour Relations Act

Telkom invoked a process in terms of Section 197 of the Labour Relations Act, to outsource certain service functions, inTelkom, as going

concerns. Section 197 (8) states thatTelkom and the new employers are jointly and severally liable to any employee who was transferred

and becomes entitled to receive payment as a result of the employee’s dismissal for reasons relating to the new employer’s operational

requirements or liquidation.Telkomwill be held liable for a period of 12 months after the date of transfer, which may result in an onerous

obligation.

Contingent asset

Tax matters

As noted in the 2015 consolidated annual financial statements, the tax treatment of the loss that arose in 2012 and 2014 financial

years on the sale of foreign subsidiaries is based on a specific set of circumstances and a complex legislative environment. A tax refund

received during prior periods, relating to the 2012 sale, is contingent and will only be recognised once the matter has been resolved

with SARS.