A cash settlement worth more than R60-million puts paid to the public’s right to know if the third cellular licence was awarded fairly Stefaans Brmmer The out-of-court settlement between Cell C and Nextcom has resolved a tug-of-war that wreaked havoc on investor confidence but the deal has likely also deprived the public of the right to know whether government cooked the award of the third cell licence. The settlement dramatically announced last Friday as Pretoria High Court Judge Hekkie Daniels readied himself to give judgement in a judicial review of the licensing process did not come cheap. It is understood Cell C agreed to pay Nextcom between R60-million and R80-million cash to withdraw the legal challenge and stop Daniels in his tracks. The judge was to have ruled whether, as alleged by Next-com, political interference and other irregularities meant the licence was unfairly awarded to Cell C. While the deal seems to have finally buried the axe between Cell C and Nextcom, it did lead to significant tensions within Nextcom, and remained the subject of intense negotiations until late this week. What has also emerged is that senior government and African National Congress officials played a significant role in facilitating the settlement.
The licensing process adjudicated by the supposedly independent South African Telecommunications Regulatory Authority (Satra), as it was then called was wracked from early with allegations of irregularities and political interference. When Satra recommended Cell C for the licence to Communications Minister Ivy Matsepe-Casaburri last July, Nextcom went to court. The Pretoria High Court agreed there was prima facie proof of irregularities. It suspended Satra’s recommendation of Cell C and interdicted Matsepe-Casaburri from awarding the licence, both pending a full judicial review. Nextcom insiders said this week that after that interdict, Cell C approached Nextcom with a view to a settlement, but that it was not only Cell C doing the talking: There were also “ANC people who were interested in seeing a resolution”. Apparently, this remained a feature until the settlement last week.
By last July, the licence debacle had become a serious headache for government. On the one hand it was pure political embarrassment, as Nextcom had presented what it claimed was evidence that Matsepe-Casaburri and the President’s Office had interfered with Satra. Theories started doing the rounds that the ANC and government’s cosiness with Saudi Arabia, home to Cell C foreign backer Saudi Oger, had motivated this “meddling”. But saving face for Matsepe-Casaburri, the government or the ANC was not necessarily the main factor that motivated senior officials to edge Cell C and Nextcom together. Alison Gillwald, a former Satra councillor now lecturing in communications policy and regulation at the University of the Witwatersrand, says the controversy and the delay in the licence award now 18 months or more have damaged investor confidence and distorted the local telecommunication market. “Getting closure under any circumstances was probably the best thing to happen.” By September the negotiations moved into a higher gear. Cell C had offered Nextcom a significant shareholding in CellSaf, the local empowerment consortium with a 40% stake in Cell C. Nextcom, while not dropping the pending judicial review, agreed to withdraw the July interdict. Nextcom officials confirmed that senior government or ANC officials facilitated these talks. Nextcom officials would not be drawn on specific personalities, but others close to the process have claimed that at various times they included the likes of Minister of Public Enterprises Jeff Radebe, Minister of Provincial and Local Government Sydney Mufamadi and Deputy President Jacob Zuma. Zuma may well have had the right personal contacts he is regarded as close to Nextcom chief executive Bushy Kelebonye, who is a former ANC underground operative, as well as to at least one prominent Cell C shareholder. Zuma’s representative, Lakela Kaunda, failed to reach him for comment on Thursday. Radebe’s representative referred queries to the ANC, while Mufamadi said he “can’t recall” being part of any ANC effort. In February this year Matsepe-Casaburri awarded the licence to Cell C, despite the pending judicial review. When the review started last month, Nextcom argued it was acting “in the public interest in ensuring that the rule of law is upheld and applied and that executive power is properly exercised”.
But when last Friday Nextcom’s Kelebonye and Cell C advocate Chris Loxton told Judge Daniels that agreement had been reached and that his judgement would not be necessary, there was no more lofty language. The public was deprived of the judgement and of judicial certainty whether Matsepe-Casaburri and the President’s Office had compromised the “rule of law”.
Jane Duncan, of the Freedom of Expression Institute, said: “The public is entitled to know whether politics were put before due process … The parties concerned have done the public’s right to know a great disservice”. But Kelebonye said he believed Nextcom had done enough: “We achieved the public interest because we really worked hard to get all the information together … and we put it on the public [court] record.” He said he believed the settlement was in the interests not only of shareholders, but also of the wider industry and the country. Kelebonye refused to reveal details of the settlement. But the Mail & Guardian understands the cash amount offered is comfortably within the R60-million to R80-million range well in excess of the roughly estimated R20-million that Nextcom spent on its licence bid and the court proceedings. In court last Friday it became clear that Nextcom’s legal representative, Cassie Badenhorst, did not necessarily agree with Kelebonye that settlement had been reached. The M&G understands this relates at least partially to the fact that the settlement came as a surprise to senior officials of Union Alliance Media (UAM), one of Nextcom’s major shareholders. UAM, together with Hong-Kong-based Distacom and Canadian network firm Nortel, are understood to have advanced the lion’s share of the funding for the bid. After Badenhorts raised his objections in court, Judge Daniels postponed the matter until this Friday. Nextcom factions were still battling out on Thursday how exactly the spoils of the settlement would be divided. But there was little doubt, at the time of going to press, that Nextcom’s factions would ratify the settlement meaning the judge will have no opportunity to give judgement.