After growing over the past four years and achieving a nationwide footprint, Mthombo IT Services (M-IT) says it will embark on an aggressive African expansion programme, which will see it initially opening branches in the SADC region.
M-IT outlined its expansion plans at the same time as it announced it had bought back the 35% stake held by Dimension Data for R11 million.
Nkhosinathi Khumalo, M-IT CEO, says that by September, the company will have set up branches in Mozambique, Botswana, Zimbabwe and Zambia.
He adds that the move is a culmination of a six-month assessment of the region, which left the company motivated by the "immense potential" present in Africa.
"We intend to work with our OEM partners like HP, Fujitsu Siemens and Dell, and at the same time will also look at maximising our relationship with arivia.kom, which is also making good inroads into the African region," says Khumalo.
For the first three months, M-IT employees will be sent to man the branch offices, thereafter local people in the respective areas will be appointed as a way of creating employment and putting in place people who are familiar with the environments.
The company projects that regional operations could initially start contributing about 10% to M-IT`s bottom line earnings and could increase to 30%.
Buy-out
Khumalo and his brother Lucky, the company`s COO, say the re-purchase of the stake is in line with M-IT`s strategy to grow into a fully-fledged services and solutions company.
It was prompted by the fact that the expansion strategy could have had long-term conflicts with Dimension Data interests.
"Our relationship will continue, because with or without equity, we still intend to keep our ties very sound," says Khumalo.
He adds that the buy-out gives M-IT the flexibility and control over its future direction.
M-IT described the move as a "second growth strategy phase" that will position it as a serious player in the ICT market.
The transaction was funded partly by the company`s cash reserves and a loan from the Industrial Development Corporation.
"The implication in terms of the final shareholding of the company means that the employees` share trust has increased from 5% to 10%, with the two of us holding the balance," says Khumalo.
Projection
The company forecasts a profit delivery of more that R10 million for the current financial year. "We are confident the growth that we have experienced over the past four years, from a seven-man team to well over 250 employees, has set a foundation for future business growth and success," Khumalo says.
The Khumalo brothers note that there are several options to consider in order to achieve M-IT`s long-term strategy. This includes the possibility of merging with one or two of the other large black empowerment ICT companies.
The other alternative is to look at listing on the JSE`s AltX once it has completed two acquisitions that are currently under way. "The pursuit of these options and opportunities is to ensure that M-IT will achieve its goal of a R100 million market capitalisation by the end of next year."
Share
