Telkom looks east for strategic equity partner for BCX

While Telkom’s mobile business has made good strides in recent years, its IT business, BCX, has been struggling.

BCX, then Business Connexion, was formed originally through the merger of two IT businesses, Comparex (formerly Persetel) and Q Data. It was bought by Telkom in 2015 in a R2.7-billion all-cash deal and offers a range of enterprise IT and telecommunications solutions.

The business has, however, been under pressure for years and has been through several restructurings – including retrenchment programmes – to reduce its cost base.

Telkom is still exploring a possible strategic equity partnership for BCX, with group CEO Serame Taukobong telling investors this week that if the right partner presents an offer with the right scale, it will certainly consider it.

“We are looking to the east or India because they have a similar customer base,” he said in an interview with the TechCentral Show this week.

The search for an investor for BCX, which is now headed by former Gijima CEO Jonas Bogoshi, is part of a wider strategic push by the telecoms operator to unlock shareholder value in its subsidiary businesses. Other initiatives include the planned imminent sale of masts and towers business Swiftnet and seeking a potential equity investor in Openserve, its wholesale infrastructure subsidiary.

Telkom hopes outside investment will help stabilise BCX’s business but progress in finding such a partner appears to have stalled.

Migration

BCX’s revenue for the year was R14.3-billion, a decline of 0.25% compared to a year ago.

The company embarked on a five-year “legacy-to-next-generation migration” in 2019, but Covid-19 slowed it down. In the year to March, migration projects resumed but data revenue declined to lower than pre-Covid rates.

Read: BCX secures rights to Alibaba Cloud solutions in South Africa

Despite the IT industry benefitting from the easing of global supply-chain constraints, load shedding, high local inflation and deteriorating economic conditions added to the pressures facing the business.  – © 2023 NewsCentral Media

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