MTN's E850m claim could ruin SPTC

The one option that could be explored, a source said, is paying MTN through the yearly dividend it gives to SPTC and, through this process, the debt could take 10 years to be cleared.

This option would result in SPTC’s profit being compromised for the whole decade because the money accrued as dividend from Swazi MTN plays a significant part in the corporation’s financial position.

SPTC is a 41 per cent shareholder at Swazi MTN hence the dividend.

The mobile telecommunications company is seeking between a minimum E400 million and a maximum E850 million for losses it claims to have suffered when SPTC breached the Joint Venture Agreement between the two by launching mobile components including ONE, Fixedfone and other associated products.

While SPTC declared in its 2011 annual report that its financial position was ‘sound and healthy’ with financial assets at E82.675 million compared to E37.931 million in 2010, sources say it would be impossible to payoff the demand all at once.

A senior executive member of the corporation indicated that ‘sound and healthy’ financial position declared in 2011 was itself a result of the dividend that is received from Swazi MTN.

According to the financials, the corporation declared having received a dividend of E82 million from Swazi MTN, which was an increase of E49.2 million from the E32.8 million it got in 2010.

"SPTC does not have E850 million to pay to Swazi MTN, so if that order is indeed eventually passed, the corporation could choose to pay in annual installments through forfeiting its dividend. That would take at least 10 years for the whole amount to be paid because we expect the dividend to continue at around E80 million or above a year," the member said. The financial position of the corporation is not expected to get any better at the end of the 2012 financial year, especially after it was ordered to stop its ONE project.

Although SPTC’s 2011 revenue rose by five per cent, the corporation had banked a lot of its hopes for future financial success on the ONE project.

"In spite of the increase in revenue, the corporation’s performance was distracted by the stoppage of ONE sales, which is key to its success," the 2011 report reads.

Phanuel Vilakati, who was fired as SPTC Chairman, stated in the report that stopping ONE threatened the corporation’s existence.

"A request to operate ONE, a fixed wireless network, was successfully frustrated to ensure SPTC does not survive. The stoppage has had a negative effect on the corporation’s revenues as it happened at a time when SPTC was to begin repayments for the NGN equipment. This, therefore, means that any further suspension of the usage of certain components of the NGN platform is undesirable," Vilakati said.

Suspended Managing Director, Elijah Zwane also lamented the situation: "It can be said that the stoppage of new connections on the fixed wireless platform was the most serious threat to the corporation’s business sustainability, and continues to pose a great challenge."

The demand by Swazi MTN has been filed with the International Court of Arbitration and the International Chamber of Commerce who should by now be in possession of the document. Sources said the demand could be heard in September.

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