Allied Electronics Corporation (Altron) is considering its potential next steps after a broadband contract between the City of Tshwane and a special purpose vehicle (SPV) involving its Altron Nexus subsidiary was set aside by a court.
The Gauteng High Court, in Pretoria, on Tuesday, approved the City of Tshwane’s (CoT’s) application to set aside the tender and award of the Municipal Broadband Network contract awarded to the SPV in June 2015.
As part of the SPV, Altron Nexus was involved as the primary network designer and architect, supplier of broadband equipment and related services, as well as a minority shareholder. The project was worth more than R1-billion over twenty years.
The CoT in August 2017 alleged that the tender award process was unlawful owing to the internal processes and procedures at the city not having been followed correctly which, as Altron Group CEO Mteto Nyati pointed out in conference call on Wednesday, boiled down to the "city effectively complaining against itself."
The project was put on hold by CoT, pending the outcome of the court case, which started in May 2018.
Nyati reiterated that the judgement did not point to any wrongdoing on Altron's part, "and, if anything, we might have a strong claim for damages or [unjust] enrichment." He stressed that discussions with the SPV partners and funders were ongoing.
Answering a question on whether the CoT's application could have been motivated by factors beyond concerns about budgetary and tender processes, Nyati noted that the project had been put out to tender by the African National Congress-led Tshwane administration, and concluded under the Democratic Alliance-led administration, which waited eight months before filing its application, suggesting that politics may have been a factor.
In a statement on Wednesday, Altron noted that Altron Nexus “reasonably” estimated the exposure of the business to amount to between R40-million and R60-million.
Nyati concluded that the judgement has no bearing on the R2.8-bllion contract with the Gauteng government.