Huge seeks fresh revenue from cloud, software, x-tech

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 01 Jun 2022
Huge Group CEO James Herbst.
Huge Group CEO James Herbst.

JSE-listed Huge Group is diversifying its portfolio by acquiring entities whose revenues are generated from cloud, software and x-tech.

Huge Group has released its financial results for the year ended February, saying while it continues to be focused on investments that generate revenues from connectivity, the future will see it diversify.

“The focus going forward will be diversifying the portfolio by acquiring entities which have greater exposure to revenues generated from cloud, software and x-tech.

“Huge believes it can distinguish itself from other investment holding companies through its understanding of markets in connectivity, cloud, software and x-tech, its management, and its investment team, which has a significant track record of building value in investment entities and generating superior shareholder returns.

As part of the strategy, Huge has since acquired Glovent Solutions, which James Herbst, a director of Huge Group, says gives it “an exciting entry into markets and industries that are key investment focus areas of ours”.

Explaining its investment policy, Huge says its purpose is to realise and deliver value to its shareholders through these investments.

“There must be tangible proof that an opportunity is sustainable and, crucially, that the opportunity can successfully be made commercial in order for it to be pursued.”

Turning to the performance of its current investments in the year, Huge says revenue from the group’s portfolio of connectivity investments has decreased in the last 12 months. This is mainly attributable to the continued effects of COVID-19, the poor local economic backdrop and the riots in KwaZulu-Natal.

In the year, the group says, for Huge Telecom, the unit faced tough economic conditions, leading to high customer churn.

It says some of the risks faced by Huge Telecom included tech innovation, competition, ageing infrastructure and managing technology migration (2G/3G/5G).

For the period under review, Huge Telecom generated revenue of R167 million, of which 63% is fixed annuity income. A gross profit margin of 74% was recorded for the year.

According to the group, Huge Telecom’s strategic aim is to become the B2B supplier of choice for “all fixed-line connectivity, onsite PBX sales and support” across South Africa.

“This will be done by offering competitive and cost-effective solutions with exceptional service to customers,” it says.

Shifting focus to Huge Connect, which provides internet solutions and business connectivity, the group says it will expand its IOT SIM offerings into Africa using global SIM partners, and it has since partnered with two unnamed global SIM providers.

The company’s revenue stood at R151 million and it recorded a gross profit margin of 68%.