A Nigerian High Court has blocked a bid by Telkom South Africa to sell its embattled Multi Links Communications until a contract controversy with Helio Towers Nigeria is concluded.After pulling out its investments from Nigeria last year claiming the investment was no longer profitable, Telkom South Africa sought to sell Multi Links Communications in a bid to partly recover its investment.Two months ago, Telkom said it had successfully sold Multi Links Communications to Nigerian CDMA (code division multiple access) operator Visafone Communications for US$52 million. At a celebrated transaction ceremony in March this year in Johannesburg, South Africa, Telkom South Africa announced the successful selling of the loss-making company to Visafone. But before the sale can be completed, Telkom South Africa must now resolve the dispute with Helio Towers Nigeria and its private equity partner, South Africa's Shanduka Group. Telkom South Africa is said to have failed to disclose to Visafone Communications a contractual payment dispute with Helio Towers Nigeria before the Multi Links sale was concluded.

The dispute stems from a 10-year rental agreement between Helio Towers Nigeria and Multi Links Nigeria, which was canceled by Multi Links after only three years. Helio Towers Nigeria, whose investors include former U.S. Secretary of State Madeleine Albright, is claiming around $250 million in contractual obligation from Multi Links. In December last year Multi Links took Helio to court, claiming that the contract was invalid because it was not signed by a Nigerian government official. But Helio counterclaimed and asked the court to declare the contract as still valid. The Nigerian High Court this week ruled that the contract is valid.

This means that the sale is blocked and Telkom South Africa must first sort out the controversy before the sale can be finalized, pushing Telkom South Africa deep into a quandary.

Before Multi Links was acquired by Visafone, the company had exited its CDMA operations due to its inability to make profit despite comprehensive turnaround programs embarked upon by Telkom South Africa. The firm continued to operate at a loss and in March last year Telkom Group had to write down $1.2 billion in losses for the company, eroding shareholder confidence in the ability of the company to make headway in the very competitive Nigerian market. The Nigerian market is currently dominated by GSM (global system for mobile communications) operators with about 90 percent share of the market. The Nigerian telecom market is Africa's largest in terms of subscription and investment.

Helio Towers started building and maintaining phone towers in Africa a few years ago. The towers are being shared by mobile service providers that want to quickly expand services to remote rural areas in the region in order to grow their subscriber base and profit.

Helio Towers Nigeria got $250 million from the World Bank's International Finance Corp. to build about 350 phone towers across Nigeria.

The business is considered by the World Bank as the most successful private equity investment in Africa. Albright is also an investor in a separate $350 million Helio Towers Africa Fund aimed at "replicating the Nigerian success."

Telkom South Africa entered the Nigerian market in 2007 after buying a 75 percent, $280 million stake in Multi Links Communications, which provides services including wireless, unified access services and international data services in Nigeria. In January 2009, the company bought the remainder of Multi Links Communications.