An expert has described South African fixed line operator Telkom’s decision to settle a competition fine of R449 million as a positive move by the firm’s new management team.

In a statement, Johannesburg Stock Exchange (JSE) listed Telkom has said it has reached an agreement with South Africa’s Competition Commission to settle the fine imposed on it in last year.

In August, the Competition Tribunal found the South African telco guilty of abusing its dominance in the telecoms market between the years 1999 and 2004: a period in which Telkom was a monopoly provider of fixed-line telecommunications services in the country.

The tribunal said that Telkom abused its dominance by charging excessive prices, refusing access to essential facilities and engaging in price discrimination, thereby making its rivals less competitive in the market.

Subsequently, Telkom appealed the decision.

But in a turn of events, Telkom has agreed to give in to paying the fine, just under a month after the telco announced the appointment of Sipho Maseko as its group chief executive officer and Dr. Brian Armstrong as its chief operating officer.

Telkom has said it reached an agreement with the commission on 15 March that it would withdraw its appeal. Moreover, both Telkom and the Competition Tribunal have agreed to pay their own costs regarding their appeal and cross-appeal processes.

Telkom has added that the withdrawal of the appeal and cross-appeal was approved by the Competition Appeal Court (CAC) on 12 April.

Paul Booth, South African ICT consultant at Global Research Partners, has told ITWeb Africa that Telkom’s decision to settle the dispute is a positive sign because such cases can drag on for a long time, which may divert management time and resources.

“I see this as a very positive sign for the executive team which has been appointed there, because this could’ve dragged on for another two or three years,” said Booth.

“I think if they had decided to continue with the legal process it would’ve cost a lot more and reaching a settlement with the Competition Commission has allowed them to save a lot of money: money they can’t afford to lose,” he said.

In terms of the agreement reached with the commission, Telkom has to pay 50% of the amount within six months of the date of the withdrawal, which was 12 April 2013.

The balance is to be paid within 18 months of the said date of the withdrawal, according to a Telkom statement.

The South African government owns almost 40% of Telkom, while state-owned Public Investment Corporation (PIC) has a 10.89% stake in the firm.