/ 26 August 2018

Sapo, MTN to fight over R900m tender

MTN, through its attorneys, wrote to treasury requesting details about the tender and whether Sapo got the required authorisation for the deviation.

Telecommunications giant MTN and state-owned South African Post Office (Sapo) might be headed for a collision course over a R900-million tender that was allegedly supposed to be awarded to MTN but ended up in Telkom’s lap.

The contract, to upgrade Sapo network facilities, was initially advertised in 2016 with both Telkom and MTN contesting. Telkom lost out because of high pricing, said two high-placed sources close to the matter.

MTN was allegedly meant to bag the tender but Sapo decided to cancel the tender last year in February, without giving reasons for the cancellation.

However, when Sapo got the South African Social Security Agency (Sassa) contract, it awarded a contract to Telkom that allegedly included some of the services from the initial tender.

MTN, through its attorneys, wrote to treasury requesting details about the tender and whether Sapo got the required authorisation for the deviation. The letter, seen by media, states the contract awarded to Telkom also was extended.

MTN subsequently wrote to Sapo CEO Mark Barnes, asking for information on the issue but was ignored. MTN said a previous attempt to access records also failed.

The sources said the matter, which resulted in MTN considering dragging Sapo to court, had caused strain between the two companies.

Mthokozisi Ndlovu, MTN spokesperson, said the company did not receive a reason for the cancellation of the contract last year and had still not received the required information.

“MTN requested certain information from Sapo regarding the cancellation of the tender but it has not been provided yet,” he said, adding that the company had not made a decision on whether to pursue the matter in court.

“MTN is waiting for the requested information so that it can make an informed decision,” Ndlovu said.

“Mothusi Motjale, Sapo group executive, supply chain management, said the tender was cancelled because the organisation felt that the initiative was unaffordable to implement, especially when weighed against Sapo’s cash flow position and our existing revenue sources at the time.

“Sapo would have had a termination penalty exposure linked to an existing services agreement. The consideration of Sapo’s network capacity was re-engaged only as a consequence of Sapo’s role in the Sassa payments of social grants. The engagement was duly approved by Treasury,” Motjale said.

There was no response to other questions asked.


Earlier this week Sapo was summoned to a meeting by Minister of Telecommunications and Postal Services Siyabonga Cwele after R200-million was transferred from Post Bank to Sapo without the required authorisation.

Departmental spokesperson Siya Qoza said the legal implication of the transaction was being considered and the matter would be finalised internally.

Meanwhile, the Black Business Council (BBC), which claims to have been approached about the issues at Sapo, said it would request a meeting with Sapo’s board and the telecommunications and postal services department about the issue.

BBC vice-president for business Keith Thabo said the organisation was concerned about Barnes’ conduct.

“There are so many unexplainable [sic] issues at Sapo, including the R900-million network tender unfairly awarded to Telkom when the MTN consortium was a preferred bidder.

“We are concerned, as the BBC, about the conduct of the Sapo CEO as alleged in a previous City Press article on flaunting of corporate governance. Our view is that, if this was a black CEO the country – including the government – would be up in arms and calling for his head.

“Here is a man who failed to turn Sapo around, who prefers white companies over black companies, who resigned as a CEO of Sapo and the board was instructed to cancel his resignation. What is so special about this man who failed to incorporate Sassa into the Post Office and who used delaying tactics to make the Post Bank a viable bank in South Africa?

“Clearly, the shareholder should act decisively about the future of Sapo under the leadership of Mark Barnes,” Thabo said.

Attempts to get comment from Telkom were fruitless, despite repeated requests from media. — Fin24