Significant accounting judgements, estimates and assumptions
On an ongoing basis, the Group is party to various legal
disputes, the outcomes of which cannot be assessed with
a high degree of certainty. A liability is recognised where,
based on the Group's legal views, advice and application
of professional judgement, it is considered probable that
an outflow of resources will be required to settle a present
obligation that can be measured reliably. The disclosure of
other contingent liabilities is made unless the possibility of a
loss arising is considered remote.
Contingent liabilities
Other than the disclosures below, no significant movement or new
matters have been noted on the contingent positions as reported in
the 31 March 2024 financial statements.
High court
Radio Surveillance Security Services (RSSS)
On 27 August 2020, RSSS served a new summons on Telkom based
largely on the same events which gave rise to its previous unsuccessful
action. RSSS is claiming the return of 444 disputed alarm systems,
alternatively payment of R210 million and a payment of R319 million
for alleged outstanding rentals for the disputed alarm monitoring
systems. Pleadings have closed in the matter. Telkom is continuing
with an application for security for costs against RSSS. RSSS has been
placed into provisional liquidation by Telkom, and Telkom is proceeding
with steps to place RSSS into final liquidation.
Class action against Telkom and Mutual and Federal Risk Financing Ltd
During June 2021, Telkom received a High Court application to certify
a class action against it. The application arises from minor billing
discrepancies relating to VAT on device insurance premiums. Mutual
and Federal Risk Financing Ltd acts as underwriter for the device
insurance and has also been cited in the court proceedings. Telkom
filed its answering affidavit in the application during July 2023. The
applicants have taken no further steps to advance the matter since
receiving Telkom's answering affidavit.
Phutuma Networks (Pty) Ltd (Phutuma)
In August 2009, Phutuma served a summons on Telkom claiming
damages in the amount of R5.5 billion, arising from a tender published
by Telkom in November 2007. The High Court granted absolution from
the instance in Telkom's favour. The Supreme Court of Appeal (SCA)
had initially dismissed Phutuma's application for leave to appeal in
October 2014. On 4 November 2014, the SCA rescinded its order
granted in October 2014. In early 2015, the SCA referred the application
for leave to appeal back to the full bench of the North Gauteng High
Court. The leave to appeal was heard in September 2016 and was
upheld. The matter now needs to be re-enrolled for trial. To date,
Phutuma has failed to set down the matter for hearing before the same
judge who granted absolution. Telkom has proposed that the matter
begins anew before another judge. Telkom has not heard from Phutuma
and it has taken no further steps to advance the litigation since 2016.
Masstores (Pty) Ltd (Masstores)
During November 2021, Masstores launched arbitration proceedings
against BCX. The claim is for an amount of approximately R166 million
for alleged breach of contract. Pleadings have closed and the matter is
currently proceeding, with steps being taken to prepare for a hearing.
Government Gazette announcement on Telkom
On 19 July 2023, the Pretoria High Court handed down judgment setting
aside Presidential Proclamation 49 of 2022 (the "Proclamation"). The
Proclamation gave the SIU authority to investigate various matters
including the contracting for network and advisory services, and
the disposal of former Telkom subsidiaries. The Pretoria High Court
declared both the Proclamation and the SIU investigation into Telkom as
unconstitutional, invalid and of no force or effect. The President of the
Republic of South Africa and the SIU were granted leave to appeal the
judgment on 11 December 2023, and the appeal is currently pending
before the Supreme Court of Appeal.
Telkom follows robust corporate governance principles and has done
so in executing the Telkom strategy to consolidate its operations in
South Africa. The aforementioned matters date back as far as 2006
and most of them have been repeatedly reported on in respective
Telkom reports.
Therefore, at this point, Telkom expects no material impact on
its financial statements resulting from the outcomes of the SIU
investigation. |
