Telecommunications company Singtel Optus is being sued for alleged breach of contract by its former retail distributor TeleChoice, which is seeking more than $100 million in damages.
TeleChoice filed a statement of claim in the Supreme Court of Victoria last month, seeking damages for alleged breach of contract, allegedly inducing breach of contract, and pursuant to n Consumer Law and the Trade Practices Act.
The total of all the claims made by TeleChoice is almost $110 million, though some are not ascribed a dollar value. The issues it is seeking redress for occurred more than five years ago.
About $98 million of the claim relates to an offer TeleChoice was considering to become a Telstra dealer at the end of its Optus agreement in 2008.
TeleChoice has alleged that Optus said it would match Telstra’s offer “dollar for dollar”, ultimately leading TeleChoice not to sign the deal with Telstra.
Part of the Telstra offer included an option that allowed customers to finance at zero interest the cost of their chosen handset and accessories as part of their mobile service plan, which was worth $160 per connection to TeleChoice.
This option was not included by Optus, which TeleChoice claims caused it to earn close to $100 million less than would have been possible under the Telstra contract.
TeleChoice also alleges that Optus did not pay it rightful commissions.
Court documents filed by the former Optus reseller allege it received an anonymous tip-off by post in November 2012 that Optus was changing the codes in its systems from those that linked customers with distributors to those linking customers to Optus.
Ultimately, it claims that this action saw the telco cease to pay commission for some customers and caused TeleChoice to lose an unspecified sum of money.
One of the issues in dispute relates to the severing of the commercial relationship between the two companies.
TeleChoice claims it was induced to believe it could meet its targets, but that it was unable to do so due to the termination of the agreement between the companies.
It was given notice in September 2012 that its agreement with Optus would end by March 31, 2013.
It’s understood the company had to undergo a significant restructure in its core business as a result of the split from Optus.
It claims it asked Optus to keep the decision private, telling the telco that when the decision became public it would put TeleChoice at risk of collapsing, that suppliers would not keep working with the company, franchisees would stop paying and creditors might try to wind it up.
TeleChoice alleges Optus discussed the termination with media organisations, which “had a material impact on its ability to meet targets” and, by making it seem as though TeleChoice would achieve its targets, Optus engaged in “misleading or deceptive conduct”.
Among the other matters alleged in the statement of claim include a failure to pay a $550,000 final branding fee, not supplying TeleChoice with phone handsets it had pre-ordered, and compensation for unsold stock.
Optus declined to comment as the matter is currently before the court.