Telkom will pay a R449 million penalty for abusing its dominance in the telecommunications sector, the Competition Commission said on Wednesday.

Deputy commissioner Trudi Makhaya said this would be done in terms of an agreement between the company and the commission.

"The Competition Commission and Telkom SA Limited have reached a settlement agreement on the basis that the commission withdraws its cross-appeal and Telkom withdraws its appeal from the Competition Appeal Court (CAC)," she said.

"The withdrawal of the appeal and cross-appeal was approved by the CAC on 12 April 2013 and the CAC's confirmation was communicated to Telkom on the 16 April 2013."

Makhaya said the effect of the withdrawals was that the matter was now officially finalised.

Telkom would pay an administrative penalty of R449m in accordance with the Competition Tribunal order handed down on August 7, 2012.

"When Telkom appealed the tribunal's ruling, the commission prepared a case to defend the appeal and also took the opportunity to raise issues it was not entirely satisfied with in the ruling.

"With Telkom withdrawing its appeal, the commission also withdrew its cross-appeal, as it had been largely satisfied with the initial ruling."

On August 7, 2012, the tribunal imposed a penalty of R449m on Telkom for abusing its dominance in the telecommunications market between 1999 and 2004.

This was a period in which Telkom was a monopoly provider of telecommunications facilities in South Africa.

The tribunal concluded Telkom used its monopoly in the facilities market to benefit its subsidiary in the competitive value-added network market.

The commission referred the matter to the tribunal after receiving a complaint from the SA Vans Association and 20 other internet service providers.

Telkom challenged the referral on various fronts, including the court's jurisdictional grounds.

After five years of litigation, the Supreme Court of Appeal rejected the jurisdictional point in November 2009, and referred the matter back to the tribunal for a hearing.