With the significant advances in information and telecommunication technology over the past few years, countries all over the world have seen how the digital revolution defined the nature of their economies. The growth spurt in the internet and its application, the advent of e-business and e-commerce, and the convergence between information technology, broadcasting and telecommunications are but a few advancements that bring with them unique challenges and opportunities and require of us to respond with agility, speed and focus to accelerate service delivery and reduce cost of doing business as we enter the "African Century".
In our quest to be globally competitive, we must embrace technology as a vehicle to ensure that all our key sectors in the economy are competitive and underpin the current restructuring phase of our economy. South Africa already has a significant capacity in IT, and can, through further investment in research and training, continue to establish itself as the technology hub of Africa thereby advancing the renaissance of our continent.
The State itself has, over the years, built up significant IT infrastructure within its various State-Owned Enterprises (SOEs). Towards the end of 1998, the then Minister of Public Enterprises, initiated a process directed towards consolidating the IT capability of these respective entities. In August 2000, when we unveiled the policy framework for the restructuring of SOEs, we highlighted the integration of information technology capabilities in SOEs as one of government`s key restructuring initiatives.
It is against this backdrop that today I am pleased to announce the formation of a new state-owned enterprise that will be a significant player in the local, regional and global IT market. This totally integrated IT solutions company, branded as arivia.kom, will assist us to make a giant leap towards crossing the digital divide. The formation of arivia.kom reinforces our firmly entrenched belief that the accelerated restructuring of SOEs will significantly contribute to our stated macroeconomic objectives.
arivia.kom which became fully operational on 8 January 2001, is a product of a merger between ITS, the IT division of Eskom, Datavia, the IT division of Transnet, and Ariel Technologies, the IT division of Denel. The sum of the values of the three entities is estimated at R644 million, whereas the value of the merged model for the three entities is about R846 million with Eskom, Transnet and Denel having direct shareholding.
This company is a product of an extensive investigation led by my Ministry with the help of Gemini Consulting. This was underpinned by extensive consultation, research and analysis; careful planning and robust implementation to ensure that a viable commercial entity emerges. The investigation evaluated the feasibility and business rationale of consolidating these three entities, exploiting synergies across the entities and leveraging the significant scale, skill and experience in the open market.
Based on this rigorous evaluation, Cabinet approved in December of last year the formation of arivia.kom, which paved the way to finalise the required agreements between the parties. These agreements were also signed in December of last year.
arivia.kom will be amongst the leading local IT companies and will be an end-to-end business solutions provider. It will have its key focus to deliver IT infrastructure solutions, focused business solutions and to engage further into e-ventures to exploit opportunities in e-commerce.
arivia.kom has crafted a very competitive business model and strategy. With its secured annuity income from its infrastructure business, the growth strategy and capabilities in its infrastructure business, the growth strategy and capabilities in its business solutions and e-ventures will make arivia.kom a highly competitive and attractive company. arivia.com will also hold outsourcing contract for IT delivery back to the three enterprises.
One of arivia.kom`s key assets is obviously its skilled and experienced staff complement. It is for this reason that arivia.kom will not make any forced retrenchments for the first three years of its life. An estimated budget of about R13 million has been set aside for re-skilling of staff where misalignments exist, and a further budget of R34 million is envisaged for equalization of the conditions of service. No one will be worst of as a result of this consolidation.
arivia.kom will have as its headquarters the Business Park here in Sunninghill. An interim Executive Management team under the leadership of Mr. Zeth Malele, the Interim CEO, has also appointed. A process to finalise the appointment of the Executive Management is underway and is expected to be finalised soon. The final composition of the Board to replace the current interim structure will also be announced in coming months.
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