Vox wants to partner for growth

Deflation has affected Vox Telecom's top line, notes CEO Jacques du Toit.

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Vox Telecom is opening itself up to potential partners to accelerate growth, as the sector comes under increasing deflationary pressure, and consolidation within the sector picks up pace.

CEO Jacques du Toit says now that Vox has consolidated its brands, it is able to explore opportunities. He says the shareholders - Investec, Rand Merchant Bank and Lereko Metier Capital - took a look at the convergence happening within the sector and decided to open Vox up to a partnership. "If you don't do something, you will end up in a tight spot."

The investors could exit the company if the right new partners come along, says Du Toit. However, he notes this is not set in stone, and Vox will capitalise on new opportunities even if it does not find a new partner, as it is also open to acquisitions. The current process will run over the next two to four weeks.

Du Toit says a new partner could come in the form of an international company, or another private equity firm. He notes the group is not on the hunt for any particular organisation, as any change will depend on the right match. "We're all on the same page here."

Vox sees the shifting landscape as an opportunity to grow, which could come from new products, sales strategies, partners or networks, says Du Toit. He adds since the company delisted, it has seen its bottom line gain around 15% year-on-year, although its revenue has been hit by deflation.

The telco received a R499 million offer from its current shareholders in the middle of 2011, and left the bourse towards the end of that year. At the time, it explained it will be better able to focus on its strategy without being encumbered by listing requirements.

The group added its share price had performed poorly, limiting its ability to conclude deals, removing value from employee share incentive schemes, and negatively affecting employee morale.

Du Toit notes that, since 2008, the cost of leased lines per minute has dropped from R1.48 to around 60c, while the per-GB charge has gone from R130 to R20 in the last decade.