Talks between Business Connexion's (BCX's) ailing communications subsidiary and a possible buyer have faltered.
In March, the JSE-listed company first told shareholders the subsidiary was in negotiations, following severely disappointing results from the division. BCX withdraw that cautionary yesterday.
According to BCX CEO Benjamin Mophatlane, the communications subsidiary and an unknown bidder, widely tipped to have been Neotel, could not come to an agreement.
Mophatlane would not confirm who the bidder was, saying, despite the breakdown in talks, both companies are still under a non-disclosure agreement.
BCX Communications' results for the six months ended 30 November 2007 showed it made a R6.8 million loss. In the previous interim period, the unit made a R7 million loss, closing the full year at a R24.3 million operating loss.
The group's shares soared when it issued a cautionary announcement relating specifically to negotiations around the subsidiary, which BCX acquired from Bidvest a few years ago. At the time, the acquisition was made to provide converged IT and telecoms networks to clients.
Seeking a buyer
Mophatlane says BCX is still reviewing the next possible option for the communications subsidiary. "We are looking for a bigger partner for that subsidiary. At the end of the day, we want to get the best for our shareholders."
He says it is difficult to say who the company hopes will approach BCX to buy the communications division. "It is a strategy for us to complete a transaction."
Neotel is not the only speculated bidder for BCX Communications. According to Irnest Kaplan, MD of Kaplan Equity Analysts, GijimaAst could also be a contender, with Dimension Data hot on its heels. Bytes Technology Group has also indicated interest.
"GijimaAst is still trading under a cautionary, looking for a converged networks and communications business," he adds.
Pieter Kok, senior research analyst at IDC SA, says: "BCX Communications plays nicely into GijimaAst's managed network infrastructure plans. Converged services and integration will be essential for most businesses in this market, especially with the telecoms space changing so rapidly."
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