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to reinstate the contract for the former partners’ mobile-based insurance product, EcoLife.

TrustCo Mobile is the mobile telecommunications arm of Johannesburg Stock Exchange-listed TrustCo Group Holdings.
It also seeks to prevent Econet from infringing on the Namibian firm’s intellectual property rights.

It has emerged that while Econet has hitherto denied owing TrustCo anything, the Namibia firm claims it is owed an estimated US$4,8 million in royalty fees. TrustCo said it would file an application in the High Court in Harare some time this week.

ECONET

• Econet snubs TrustCo
  
• Econet to introduce free life insurance cover for subscribers
  

The company dismissed Econet’s claims that it had unilaterally terminated the contract with Econet. The latter said the local mobile phone operator had walked out.
TrustCo group chief executive Mr Quinton van Rooyen disclosed it was, in fact, Econet that cancelled the contract after it served them with a notice of default.

As a result, Mr van Rooyen said, millions of people were sitting with large amounts of life cover, which would not be activated due to the termination of the contract.
Econet last week said TrustCo cancelled the contract after they complained over the Namibian firm’s breach of certain provisions of the agreement.

But Mr van Rooyen said Econet walked out after TrustCo raised concern over delays in payment of royalty fees, which allegedly incensed the local firm. Econet also delayed insurance premium payment to First Mutual Life.

“Upon receipt of the notice of default, Econet unilaterally and immediately terminated the contract, severed TrustCo’s and FML’s access to the TrustCo system and denied outstanding payment to TrustCo.
“On June 1, 2011 Econet conceded payment was due to FML. Econet further indicated that while payment was outstanding it was nevertheless available. FML is by law not required to honour cover if premiums are not paid. FML could not confirm it would honour claims,” he said.

Last week Econet said TrustCo unilaterally terminated the contract after it declined the latter’s claim for more money outside the agreed amount and that it disclosed confidential information in violation of the contract.

The two companies initially agreed on a US$1 royalty fee per customer, but revised this to US$1,11 after the Commissioner of Insurance said Ecolife should also cover HIV-positive people and those who had pre-existing ailments.

“An amendment to the agreement to effect the royalty fee amendment was signed by all parties on January 24. Subsequent to the increase, none of the parties challenged the contract on the basis of the US$1,11 fee,” said Mr van Rooyen.

Econet chairman Mr Tawanda Nyambirai earlier alleged TrustCo misled the public when it claimed insured customers numbered 1,6 million when the correct figure, according Econet, stood at 1,2 million.
Mr van Rooyen said: “Interestingly, this number has been publicly quoted by Econet in the international media. As at May 31 1 856 938 subscribed to the EcoLife package.”

The Namibian firm insisted that the disclosures it made on the JSE on the Stock Exchange News Services were in compliance with JSE regulations.
TrustCo further claimed that while Econet said it inundated EcoLife customers with unsolicited messages its actions were not ultra vires the contract.

Under the EcoLife insurance scheme Econet subscribers would get prescribed threshold of free life cover commensurate with a designated amount of airtime used.
TrustCo owns the software system used for EcoLife.

TrustCo said it had put on hold similar ventures in Zimbabwe, as it emerged other mobile phone operators were likely to follow in Econet’s footsteps.
Giving background to the dispute, Mr van Rooyen said Econet once proposed to acquire a stake in TrustCo, but the proposal was turned down.