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EOH targets emerging market expansion

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 21 Jul 2017
New EOH group CEO Zunaid Mayet.
New EOH group CEO Zunaid Mayet.

EOH is looking for more opportunities in emerging markets and plans to focus on what new group CEO Zunaid Mayet calls "more deliberate acquisitions".

He made the comment in a telephonic interview with ITWeb about his new role and strategic plans.

Mayet explained the company's international expansion aspirations are in "targeted geographies" and are "very much an emerging market play".

"We have got a lot of IP [intellectual property] and technology, as well as capacity from a skills perspective ? where we have a proven track record from our client base in SA ? and the opportunity to replicate that in other emerging markets is certainly there; simply because their needs, requirements and demand are very similar to our country," Mayet told ITWeb.

He would, however, not specifically identify emerging market countries that pique EOH's interest.

"Up until now, it's been very much looking at the rest of the continent as well as the Middle East and Turkey. I think that is keeping us busy for the moment. We are exploring other regions but I think it's a little early to say whether we will enter those markets or not.

"Continuing our growth strategy I think now is about becoming a bit more deliberate around our acquisitions." Mayet added the group was looking at particular industries where it needed to "bulk up".

Mayet took over when Asher Bohbot stepped down at the end of June, after 19 years as CEO of the ICT services company. Mayet has been at EOH for eight years and previously held the position of CEO of EOH Industrial Technologies, a division he started six years ago.

As CEO, Bohbot was largely credited for driving EOH's growth strategy over the years, which led to a trend of consistently strong financial results. The group has a 12 500-strong workforce and has 134 points of presence in SA, while its scope stretches to another 32 countries in Africa. Its portfolio includes a range of outsourcing, cloud, managed services, industrial technologies and business process outsourcing solutions.

Local strength

Mayet may be looking abroad for expansion but he remains upbeat about the South African market, saying that despite tough economic times, EOH's business remains strong because it is "counter-cyclical".

Former EOH CEO Asher Bohbot.
Former EOH CEO Asher Bohbot.

"We are a tech company, so whilst the rest of the market and the economy's growth has slowed down, I think the investment in technology and the deployment of technology [is still growing], given the rate and pace of change. I think many organisations still need to make investments in technology to make their businesses more robust and resilient.

"So while the general market and economy might be growing a whole lot slower, from a technology point of view there is a little more growth and spend in that market."

He said even in difficult economic times, technology can enable organisations to diversify and grow their revenue streams and can also become an enabler for more cost-effective and efficient operations.

"We operate in SA in a marketplace that is pretty large. We estimate the size of the market to be about R200 billion across our portfolio, in the different industries and domains we operate in, and given our relative size from a revenue perspective in that market space, our market share is anywhere between 5% and 8%. So we have a whole lot of market potential to grow into outside of what we have today."

Blending continuity, change

In terms of his management strategy for the company, he says it's going to be "a blend of continuity and change".

He wants to maintain EOH's "entrepreneurial culture and DNA" but at the same time run a corporate that ensures appropriate oversight, governance and compliance while remaining flexible, agile and responsive in a rapidly changing market.

"We will continue to remain true to our purpose of being a knowledge services technology solutions organisation. And also keep the philosophy we have in EOH around best people, around right first time, around partnerships for life. Also sustainable transformation in SA in particular, leading and growing and really being an ethical, relevant force for good within our country and the other societies and countries we operate in."

Since ITWeb did the interview, EOH has come under fire for alleged corruption linked to services provided to the South African Social Security Agency (SASSA). Earlier this week, EOH's share price came under serious pressure, losing 12% in value at one point and closed almost 9% down at R115.80 on Tuesday, its lowest closing price since early 2015.

EOH responded to the article published by the Business Report saying it was a "regurgitation of a previous article published by another media outlet three months ago" and that at the time of publication of the original article, EOH "publicly responded and repudiated the content of the article", which it says was "based on false and unfounded insinuations".

"The company would like to reiterate it has been a service provider to [SASSA] for eight years and is proud of its track record and quality, depth of skills and expertise it provides. All services provided to SASSA were awarded on merit, after having undergone open and transparent tender processes, in compliance with the Public Finance Management Act."

The group said it is considering all options available "for recourse and corrective action in respect of any harm caused to EOH and its stakeholders".

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