for the six months ended 30 September 2016
Based on ICASA's Complaints and Compliance Committee (CCC) ruling in the prior period, Telkom had initiated administrative review proceedings seeking to set-aside the applicability of the Regulations at issue. The review application is in process and no hearing date has been allocated as yet. In the interim, however, ICASA promulgated the Amended End-User and Subscriber Charter Regulations on 1 April 2016, in terms of which the fault clearance measurement for fixed services was amended to 90% fault clearance within 5 days, instead of 3 days. Telkom is assessing the impact of the amended Regulations on Telkom going forward.
At 31 March 2016, it was disclosed that the date for the hearing of the review application was to be set down. No date has been set down as yet for the hearing. Management believes that this matter no longer meets the definition of a contingent liability and will therefore no longer be disclosed as such.
In December 2011, RSSS served a summon on Telkom for the sum of R216 million. Telkom is defending the matter and has filed a plea and counterclaim for R22 million. No contract was concluded with RSSS, no purchase orders were issued and no quotations were accepted by Telkom. The trial which commenced in May 2016, is re-enrolled for hearing in April 2017.
In August 2009 Phutuma served a summon on Telkom, claiming for damages arising from a tender published by Telkom in November 2007, claiming damages in the amount of R5,5 billion. The High Court granted absolution from the instance, in Telkom's favour. The Supreme Court of Appeal (SCA) had initially dismissed Phutuma's application for leave to appeal in October 2014. On 4 November 2014, the SCA rescinded its order granted in October 2014. In early 2015, the SCA referred the appeal back to the full bench of the North Gauteng High Court. The appeal was heard in September 2016 and judgement was reserved.
As noted in the 2015 consolidated annual financial statements, Telkom invoked a process in terms of Section 197 of the Labour Relations Act, in a bid to outsource certain services as going concerns. Section 197 (7) states that Telkom and the new employers are jointly and severally liable to any employee who becomes entitled to receive a payment a result of the employee’s dismissal for a reason relating to the new employer’s operational requirements or liquidation or sequestration. Telkom will be held liable for a period of 12 months after the date of transfer, which may result in an onerous obligation.
As noted in the 2016 consolidated annual financial statements, the tax treatment of the loss that arose in prior years on the sale of foreign subsidiaries is based on a specific set of circumstances and a complex legislative environment. On 4 August 2016 SARS issued a tax assessment relating to the 2012 period. After consultation with external specialist tax and legal advisors the Group disagrees with SARS' audit findings, however the tax refund received relating to the 2012 sale, remains contingent and will only be recognised once the matter has been resolved with SARS. The matter is continually being assessed to ensure that developments are appropriately reflected in the financial statements. Refer to note 20.