Economy

Telkom masts pay dispute goes to London arbitration

dnNyeriNetwork1503s

A silhouette of a communication mast. FILE PHOTO | JOSEPH KANYI | NMG

The High Court has referred a licensing fees dispute amounting to over Sh1 billion between Telkom Kenya and telecommunications infrastructure service provider American Tower Corporation (ATC) Kenya to the London Court of International Arbitration as sought by the Kenyan company.

Justice Josephine Mong’are said in a ruling on November 30, the agreement between the parties clearly outlined how the disputes would be resolved and failure to settle any matter amicably, it would be referred to an arbitrator.

ATC, whose parent firm is based in Boston, is seeking $2,643,176 (about Sh405 million) for damages and Sh611 million arising from unpaid licensing fees from 2021. The company moved to court to force Telkom to pay the money.

However, Telkom asked the court to refer the dispute to an expert and arbitrator to be appointed by the LCIA, in accordance with the terms of the agreement signed by the parties.   

Telkom cited the Master Site Licence Agreement signed between the parties on October 1, 2018, the Master Tower Agreement dated August 12, 2014 and the Site Sharing Agreement dated November 25, 2009.

“Consequently, I am satisfied that the application to stay the proceedings and refer the matter to arbitration has merit and I shall allow the same,” the judge said.

Although ATC asked the court to dismiss Telkom’s application for asking the court to refer the case to an arbitrator too late, the judge said since Telkom had not filed any defence or taken any steps which would be construed as acknowledging the claim, the application for stay and reference to arbitration is properly before the court.

“In my assessment, both parties confirm that there was a valid and binding arbitration agreement between them. The issue in contest is whether there exists a dispute that was agreed to be referred to arbitration,” the judge said.

Telkom has disputed the amounts being claimed by ATC, arguing that it incurred huge losses because of the company's failure to carry out restoration works following outages, disconnecting and allowing obstruction of its apparatus in breach of the agreements. 

Telkom further contends that the money claimed by ATC has either been offset or settled or invoices not shared with it. It further contends that it has been paying Sh150 million per month which ATC has not acknowledged.

For these reasons, Telkom argued that the dispute ought to be referred to arbitration.

ATC on its part said there is no dispute to be referred to arbitration as Telkom has admitted the debt due to it and has failed to comply with the contractual mechanism for challenging the debt.

The telecommunications infrastructure firm also argued that the debt has been admitted by Telkom in the past, as evidenced in an email on November 19, 2021, by the chief executive officer Mr Mugo Kibati who allegedly offered to pay of Sh2.7 billion over a period of 18 months at Sh150 million per month.

[email protected]