As the year draws to a close, ITWeb looks back at the high- and low-lights that characterised 2013, as well as those factors that will influence the ICT sector in the year, or years, to come.
In alphabetical order, here are our 10 most memorable business and financial stories of the year.
1. Altron and Altech finally tied the knot in a R1.8 billion deal, ending months of speculation caused by concurrent cautionaries. Altron's purchase of the stake that it did not already own in Altech is expected to take between a year and 18 months to bed down, as the company shuffles units and extracts synergy. As a result, it is holding back on any other merger and acquisition activity for now. Buying Altech was its biggest ever deal and wraps up a lengthy process to get all of its units under one umbrella that started towards the end of 2007. The streamlined structure means Altech can take advantage of cross-selling opportunities and offer end-to-end solutions.
2. The channel, which saw some buyouts - including MB Technologies' bid for SecureData, Westcon wrapping up its purchase of Comztek, and Pinnacle Technology buying 35% of Datacentrix, in a deal worth more than R200 million, at mid-year. The channel is ripe for further consolidation, and moves in the sector will be driven by challenging market conditions, changing vendor models, a need to drive economies of scale, as well as a lack of growth opportunities. Among deals that are expected are from the value-added reseller and reseller part of the channel, buyouts of smaller players and tie-ups between channel partners and distributors.
3. ConvergeNet, which last year went through a hostile takeover, has since become a shadow of its former self. It is going through a major restructuring that includes selling off several business units, shutting down its head office, and planning to retrench staff. ConvergeNet's restructure was the result of its "deteriorating financial performance" due to "excessive costs and a lack of strategic focus". In the six months to February, ConvergeNet posted a R23.2 million loss and made an operating loss of R28.6 million, compared to an operating loss of R8.3 million for the first half of the previous year. The group is selling Sizwe, X-DSL, Telesto, its stake in Simat SA and EQ Tickets for a combined amount of R132.2 million. The funding will be used to pay outstanding debt obligations and for general corporate purposes.
4. A potential merger between FoneWorx and the Kirsh family, which would have created a R478 million company by merging the Kirsh's Value+ Nettwork with FoneWorx, fell apart during the year. The deal was called off after the FoneWorx board decided, on the back of additional information, that it would be reckless and endanger the company. The failed deal cost it R1.4 million in legal fees, but it has put that behind it and is now working with partner Caxton and looking for acquisitions in a bid to boost growth.
5. Top-end shuffles, a project gone bad, a vastly higher net loss, and a plummeting share price plagued Gijima this year. The group saw CFO Carlos Ferreira leave, interim CEO Eileen Wilton take the reins on a permanent basis, and it embarked on yet another turnaround strategy during 2013. It also lost R160 million on a single project that went bad and contributed heavily to its R211 million loss for the year. It is now involved in legal fisticuffs with Anderson Scanning Technologies, which Gijima argues let it down, while Anderson is countersuing, claiming Gijima hijacked the sub-contractor.
6. Mobile companies will, from next year, have to face up to the growing trend that is the shift from voice to data usage, which had already become quite pronounced this year, and is showing in the numbers. The shift, culminating in less revenue and lower margins, is deepening and shows at top line level. Vodacom's first half showed a mere 2% gain in income from its network, with service revenue at R30 billion when stripping out currency effects. Likewise, MTN reported revenue growth of 1.9%, to R65.2 billion, in the first half of the year, a figure that also strips out year-on-year currency shifts.
7. In the balance is Net 1 UEPS Technologies' R10 billion deal to provide payment solutions for the South African Social Security Agency. The contract has been declared invalid by the Constitutional Court, but a hearing as to what will happen next will only take place in February. Allegations of corruption around the awarding of the deal have tarnished Net 1 this year and news that the US Securities and Exchange Commission and Department of Justice's Criminal Division were investigating whether there was bribery involved saw its shares tank, scuttling plans to grow its empowerment stake. It has, however, since inked a R264 million black economic empowerment deal with two entities.
8. Another company that has slimmed down considerably is SecureData, which is selling SensePost and is being bought out by MB Technologies for R85 million. That move will see the bourse lose yet another ICT stock. Its sale of SensePost, for R36 million, leaves it with its loss-making African entity. In the year to July, a period that included SensePost, it made a modest profit of R2.38 million, compared with its net loss last year of R38 million. Revenue also improved, growing from R222 million to R289.7 million as its recent restructuring bore fruit.
9. Telkom had a turbulent time while trying to make inroads in its process to right the ship. Although the group's numbers are looking better, any headway made by its fairly new CEO, Sipho Maseko, has yet to be seen on an operational level. It is still cutting costs, despite having let go 1 500 staff through a voluntary retrenchment and early retirement process, and needs to find a way to bolster its top line, which has stagnated in recent years. On the up side, its appointment of Brian Armstrong as COO and its move to write down its legacy assets by R12 billion were both moves the market welcomed. The group also settled an old score with the Competition Commission. However, it had to fend off a threatened strike by organised labour over its wage offer, and its CFO, Jacques Schindeh"utte, is still suspended pending a disciplinary hearing.
10. Zaptronix went from bad to worse to gone from the bourse this year. It started the year suspended by the JSE for failing to comply with its rules, and then went into a financial downward spiral. Its last published figures, for the six months to May 2012, showed revenue of R14.1 million and a net loss of R2.845 million. It is now in business rescue, after it ended up in a dire financial situation caused by deteriorating market conditions, and the failure of the site risk business, I-to-I Technology Solutions, which it acquired from I-to-I Technologies.
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