FIRSTEL Zimbabwe, a cellular service provider for NetOne, Zimbabwe’s first and leading GSM network operator has been sued for allegedly failing to pay over $8 million it had collected from NetOne’s subscribers.
FIRSTEL‘s core business is to sign up new NetOne subscribers and offer a range cellular terminal equipment for telcos. According to their agreement, Firstel was to sign up new contract subscribers for NetOne then bill them and receive payments on behalf of NetOne.
Now, NetOne says between January and March 2009, Firstel failed to settle its bills collected from selling contracts to NetOne subscribers as agreed in contract amounting to $8 million. The reports allege that Firstel Cellular failed to remit the amount due to the country’s intoduction of multi-currency, and many firms shifted from the local currency to the United States dollars.
NetOne argues that the contract line subscribers were to pay Firstel, which would then subtract its commission then remit the rest to NetOne. When Firstel failed to remit the dues as agreed in the contract, NetOne obtained a high court order against Firstel. Firstel was asked to pay NetOne even if it the clients had defaulted. Firstel went to the Supreme Court and appealed saying it was against public policy for it to pay when it had not collected any payments.
In its appeal at the Supreme Court, Firstel argues that it was a condition precedent for the liability of the appellant to arise for payments to be made by the customers first and because it was to be paid by discounts and commissions, it cannot be held liable as it has not earned any commission for it was not paid by the would-be customers.
However, NetOne remains adamant.
It argues, Firstel made it incur some debts and its promises of recovery made it believe Firstel will pay its dues coupled with Firstel’s acknowledged existence of customers. Net-One also added that the Supreme Court should steer clear of the High Court appeal as it was sound and proper.