More Africa NewsSouth Africa: investigation announced on Telkom for allegations of corruption

January 31, 2022by myles0

In the early 2010s, South African mobile operator Telkom ceded or sold some of its African operations in controversial deals. Almost ten years later, the government wants to shed light on these operations. 

Telecom operator Telkom South Africa will be investigated by the Special Investigations Unit (SIU) into ”  allegations of corruption and maladministration  ” in relation to the company’s activities on the rest of the continent. President Cyril Ramaphosa endorsed the SIU in a statement released on Tuesday, January 25.

The investigation will focus primarily on Telkom’s sale of iWayAfrica and Africa Online Mauritius, which occurred in a single transaction at the end of 2013, and the divestiture of Multi-Links Telecommunications in 2011, although the potential scope of the investigation is broader. The SIU will also investigate any improper or illegal conduct by Company employees or agents.

In a statement, Telkom South Africa said it was awaiting further details on the scope of the investigation, adding that it has already disclosed various elements relating to the transactions in question.

Telkom took control of the Nigerian company Multi-Links in 2007, then bought it outright in 2009 for $410 million. Two years later, it sold struggling Multi-Links for just $10 million, after a legal dispute prevented it from completing a sale that would have raised $52 million.

iWayAfrica was created after Telkom bought MWeb Africa in 2007 and combined it with its related Africa Online business. When it was sold in late 2013, it was an ”  intangible part  ” of Telkom, according to the company, and had accumulated losses. Telkom had paid 624 million rand (about $40 million) for MWeb Africa, and 150 million rand for Africa Online.

The opening of this investigation comes in a context marked by strained relations between the government and the mobile phone company. The latter has been trying for several months to delay the process of granting spectrum licenses in order to protect its commercial interests. In early January, the company filed a lawsuit against ICASA to stop the spectrum allocation. She eventually withdrew it, but is continuing her legal action on the merits.

This initiative by the South African president could shed light on the circumstances in which the transactions took place within the framework of Telkom’s African operations. It could also enable the government to recover all or part of its financial losses in Telkom SA, in which it holds a stake of nearly 40%.

Source: Agence Ecofin

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