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TELKOM SA SOC LIMITED - Settlement of the Multiple Complaints Referral

Release Date: 18/06/2013 17:40
Code(s): TKG     PDF:  
Wrap Text
Settlement of the Multiple Complaints Referral

Telkom SA SOC Limited
(Registration number 1991/005476/30)
JSE share code: TKG
ISIN: ZAE000044897
("Telkom" or the "Company")

Settlement of the Multiple Complaints Referral


Shareholders are advised that Telkom SA SOC Limited (“Telkom”) and the
Competition Commission of South Africa (“Commission”) have concluded a
settlement agreement to resolve a series of complaints lodged against Telkom
during the period 26 June 2005 to 19 July 2007 by certain Internet Service Providers
(“ISPs”), namely Internet Solutions Pty Ltd, the internet division of Multichoice
Subscriber Management Services Pty Ltd, Verizon Pty Ltd and the Internet Service
Providers Association.

The Commission referred elements of the above complaints to the Competition
Tribunal (“Tribunal”) on 26 October 2009 (the “Referral”). In the Referral, the
Commission characterised Telkom’s conduct as a contravention of sections 8(a),
8(b), 8(c), and 8(d) (iii) of the Competition Act, 1998 (“the Competition Act”).

The main aspects of the settlement package are:

-   an admission by Telkom of a contravention of sections 8(c) and 8(d) (iii) of the
    Competition Act;
-   an administrative penalty of R200m in cash payable over a 25 month period;
-   undertakings by Telkom regarding the functional separation between Telkom’s
    retail and wholesale divisions along with a transparent transfer pricing
    programme and code of conduct to ensure non-discriminatory service provision
    by Telkom to its retail division and ISPs;
-   pricing commitments in the form of price reductions over the 2014, 2015 and
    2016 financial years in respect of certain products, and an undertaking that the
    price reductions are not reversed in the 2017 and 2018 financial years. The
    price reductions will have an indicative value of R875 million over the 2014 and
    2016 financial years; and
-   an undertaking to roll-out points of presence at strategic locations in the public
    sector during the 2014 financial year.

The agreement was signed by Telkom on 14 June 2013 and is subject to approval
by the Competition Tribunal. Telkom and the Commission will jointly apply to the
Tribunal for the settlement to be made an order of the Tribunal in terms of section 27
of the Competition Act.

Telkom has made a provision in its 2013 annual financial statements for the full
amount of the R200 million penalty.

Pretoria
18 June 2013

Sponsor:
The Standard Bank of South Africa Limited

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