In a recent development, the Pretoria High Court has overturned a Presidential Proclamation that granted the Special Investigation Unit (SIU) the authority to probe questionable deals at Telkom, a partly state-owned entity.

As reported by MyBroadband, in January 2022, President Cyril Ramaphosa issued the proclamation, empowering the SIU to investigate specific transactions involving Telkom. The focus of the investigation was on Telkom's 2011 sale of its unsuccessful Nigerian venture, Multilinks, and the 2013 sale of iWayAfrica and Africa Online Mauritius.

The impetus for this investigation arose when the late communications minister, Roy Padayachie, claimed that Telkom incurred a substantial R7 billion loss after acquiring Multi-Links in March 2007.

Challenging the constitutionality of the proclamation, Telkom took the matter to the Pretoria High Court in July of the same year. The company contended that the President exceeded his powers by involving the SIU in the investigation, arguing that Telkom is not a state institution as defined by the SIU Act, despite its official name, Telkom SA SOC Limited, which includes "SOC," signifying a state-owned company.

After a year-long legal process, the Pretoria High Court has declared the Presidential Proclamation unconstitutional, invalid, and without any legal effect. The court has also granted costs to Telkom.

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Telkom responded to the court's ruling by stating that it had already taken appropriate remedial measures following internal investigations into the issues raised in the proclamation. The company emphasized its commitment to upholding robust corporate governance principles and assured its continued adherence to these principles going forward.

The ruling comes amidst challenging times for Telkom, with the company's recently disclosed financial results for the fiscal year leaving much to be desired. According to the summarized consolidated statement of profit and loss, the group's profits declined significantly from R2.6 billion in FY22 to R346 million in FY23.

It is worth noting that certain financial information in the results was presented as pro forma financial data, based on assumptions about future performance and hypothetical data. The pro forma adjustments for FY23 included a substantial impairment of R13.071 billion, with a related tax impact of R3.47 billion, alongside limited costs of R1.065 billion and the associated tax impact of R288 million, and a noteworthy R10.479 billion invested capital write-up of BCX and Gyro.

In light of these adjustments, the group reported a substantial loss of R9.97 billion, leading to the decision to withhold dividends for the third consecutive year. Despite these challenges, Telkom remains steadfast in navigating its path forward and addressing the pertinent issues to sustain its position in the market.