Telkom searches for BCX ‘strategic investor’

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 19 Jun 2023

Telkom Group is on the lookout for a “strategic equity partner” to invest in its BCX IT services unit, as it looks to unlock cash-flow to scale the business.

In an e-mail interview with ITWeb, Telkom group CEO Serame Taukobong says the company is continuing with its “value unlock strategy” – where it is looking for partners to support its requirements either for scale or capability, or both – to enable it to compete more effectively in the market.

This, as the potential takeover of Telkom has sparked industry-wide interest, as the ailing telephony group is increasingly becoming attractive to potential investors because of its extensive infrastructure, data centres and customer base.

Taukobong tells ITWeb: “Telkom is investigating the possible introduction of a strategic international or local equity partner at BCX, to enhance scale and capabilities in various growth areas, particularly cloud service and cyber security.”

In its latest financial results, Telkom reported its revenue was marginally up by 0.9%, and revealed it planned an asset write-down of R13 billion, through the planned impairment of its businesses Openserve, Telkom Consumer, Gyro and BCX.

The announcement saw the telco’s shares plunge by 30%.

The results showed BCX remained under pressure, as its converged communications business continued to be impacted by migration to next-generation technologies and robust competition in the market.

“BCX had a challenging year but managed to maintain stable revenue levels. Performance was driven by growth in the IT business, which was offset by declines in the converged communications business,” said Taukobong during the annual results webcast presentation to investors last week.

Taukobong explained significant market changes and challenging economic conditions, among other difficulties, had an adverse effect on the group’s performance.

Responding to a question during the webcast, about whether the telco is considering selling off BCX to an investor, Taukobong said: “With BCX, we’ve always talked about finding the right strategic partner, and what we need in scale and capability. So, if we do find the right strategic partner, we would definitely give it our consideration.”