The Competition Tribunal has approved Telkom's bid to buy Business Connexion (BCX) for R2.67 billion, but the looming question is the impact this deal will have on the employees of both companies.
Telkom is in a job-cutting process, offering employees voluntary retrenchment packages and voluntary early retirement packages, as it looks to cut about 4 400 jobs. On Friday, the telecoms company accepted a total of 2 393 employees' applications for voluntary severance packages.
Meanwhile, BCX previously denied reports that the technology company had plans to retrench staff.
In a statement to ITWeb, BCX CEO Isaac Mophatlane says there won't be any dramatic changes in the near future.
"The management team will remain in place to ensure continuity - it has always been part of the deal that Business Connexion will run as an independent subsidiary within the Telkom Group.
"We do not anticipate that the deal will impose any negative changes for our teams. The proposed transaction will, however, present a myriad of opportunities and additional benefits that apply to both companies' employees," says Mophatlane.
On Tuesday, in a joint statement, Telkom and BCX confirmed the Competition Tribunal approved the takeover. Telkom is acquiring the entire issued share capital of BCX, which will then delist from the JSE.
Telkom Group CEO Sipho Maseko says the acquisition will benefit both Telkom and BCX customers. He adds Telkom's commitment to BCX is as a long-term investor. "As a result of this transaction, Telkom will be able to grow beyond its core business of connectivity by expanding into ICT services, while reinforcing our connectivity offering and enhancing Telkom's convergence strategy."
DiData's case
This week, it was reported Dimension Data wanted the Competition Tribunal to impose more sanctions on Telkom if its deal to buy out BCX is approved.
Following the approval, ITWeb sought comments from DiData to determine if it will seek legal action to stop the deal from going through.
"The tribunal hearings are taking place this week, and therefore Dimension Data is not in a position to comment on the Telkom/BCX transaction until that process is completed," says Hilary King, global PR manager at Dimension Data.
The Competition Tribunal's Web site still notes the hearings for the Telkom/BCX merger are scheduled from 3 August to 7 August.
However, Derrick Bowles, Competition Tribunal senior case manager, confirms the merger has been finalised: "The tribunal has issued its order and the matter has been approved subject to certain conditions."
Bowles says DiData was involved during the hearings process and was satisfied with the conditions that have been proposed.
As a listed entity, BCX still needs to get approval from the Takeover Regulation Panel. Following that approval, the company will be delisted and the shareholders will be paid out.
Spreading out
Richard Hurst, ICT analyst at Ovum, says the approval of the deal is a very positive move for Telkom, as it will able to move up the value chain in terms of ICT services, and it gives the telco a healthy footprint of IT services in SA as well as other territories across the continent, Europe and the Middle East.
"I think it is very important and is central to their [Telkom's] turnaround strategy and will certainly give them a boost in respect of IT services."
Hurst says he doesn't foresee the merger having a negative impact on BCX employees since there is very little in the way of overlap.
"We can expect certain services such as data centres to be consolidated under the BCX business but I think the impact on overall staff will be minimal," he says.
Lehlohonolo Mokenela, ICT industry analyst at Frost & Sullivan Africa, says strategically this seems a good fit for both companies, especially in a market still looking for greater convergence.
"With this deal, the combined entity would be ideally placed to offer a much wider range of services to customers, particularly the large enterprise customers.
"Telkom can certainly leverage some of the scale and expertise of BCX, and likely merge its own IT services unit, Cybernest, into BCX's operations," says Mokenela.
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