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2020 in review

Despite the COVID-19 pandemic, the technology industry continued to thrive, with worldwide growth of 4% predicted for 2021.
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2020 was yet another vibrant and exciting year for the technology industry, despite the COVID-19 pandemic; although, according to Gartner, IT spending is expected to be down 5.4% from 2019.

The international market has been dominated by IBM’s split announcement, several significant and large acquisitions in the semiconductor sector and the ongoing global investigations/fines of the ‘big’ tech boys. Locally, Alviva’s acquisition of Tarsus Technology Group and Gijima’s acquisition of T-Systems SA stood out as two significant events.

As has been the norm over the past few years, 2020 has again seen the emergence of numerous start-ups; a significant number of IPOs globally; heavy private equity activity that was not limited to the US alone; and a feverish merger/acquisition scene.

From a business and technology perspective, artificial intelligence (AI), analytics, the continued move towards the digital world, cyber security, the Internet of things (IOT) and robotics are still the key and immediate opportunities going forward.

In addition, consolidation continues apace particularly in the AI/analytics, cyber security, semiconductor and telecommunications/communications fields; while many of the ‘bigger’ players continue to streamline their operations by either splitting off, listing or selling off non-strategic elements of their businesses, while also trying to discover and bring onboard new initiatives.

The local scene

This year has been a positive one, with the imminent listing of Bytes Technology in London and on the JSE, and no de-listings.Moreover, there were a handful of new entrants appearing in the local market, although some indirectly, including Itouch, Kerlink and the Salt Recruitment Group; and new office openings by entities such as Blue Prism.

Locally, the focus will be on the future of Cell C, EOH and Sebata Holdings.

As usual, there was healthy merger/acquisition and investment activity, including multiple ones by Datatec and Naspers/Prosus.

Other deals, aside from the ones mentioned earlier, included:

  • Actis buying a controlling stake in Octotel;
  • Ayo Technology Solutions agreeing to acquire Kathea Communication and 60% of Kathea Energy;
  • CipherWave agreeing to purchase Rain’s Broadlink telecommunications business;
  • The merger of Customer Fraud Solutions with MoData to create MoData Digital Services;
  • Doxim acquiring Striata;
  • Epsidon Technology Holdings buying Core Networks and Nology;
  • Evernex acquiring Storex;
  • GoDaddy purchasing South African social content start-up Over;
  • Host Africa buying Gweb Hosting and Hob Host;
  • Snappify acquiring Onnie Media/Teacha;
  • Syntell purchasing EOH’s MARS Holdings;
  • TeleMasters buying Contineo Virtual Communications;
  • Ukheshe entering into an agreement to buy Oltio;
  • Woven buying BYC Aqua Solutions; and
  • XContent Business Solutions taking over Auric Consulting.

Other key events included:

  • Minister Stella Ndabeni-Abrahams confirming government is pressing ahead with a plan to merge state-owned enterprises Broadband Infraco and Sentech to form a new infrastructure company;
  • 4Sight Holdings disposing of Digitata;
  • Blue Label Telecoms disposing of its 47.56% interest in Blue Label Mexico;
  • EOH selling its stakes in Construction Computer Software and LSD Information Technology;
  • Net1 disposing of KSNET;
  • Sebata Holdings disposing of IPES Utility Management Services, Nerdworks Turrito, Sebata Municipal Solutions, R-Data and MICROmega Accounting and Professional Services;
  • Telkom’sBCX announcing it will spin off its data centre business into another Telkom subsidiary, Gyro; and
  • Tellumat disposing of its Air Traffic Management and Defence & Security business units.

In addition, Liquid Telecom SA announced a strategic repositioning as Liquid Intelligent Technologies; and Atio, Elingo, EOH’s Nextec Advisory business unit and Cash Paymaster Services were being liquidated.

Key appointments during the year included new country managers/GMs/CEOs/MDs at many companies, including AEEI, Canon SA, Etion, Google, Hitachi Vantara, Huge Connect, iTMaster, Liquid Telecom SA, MTN Group, MultiChoice SA, Nashua Group, Net 1 UEPS Technologies, PBT Group, Technologiks, The Blue Pencil Group, Vodacom SA and Webafrica.

Xolani Humphrey Mkhwanazi, chairman of EOH; and Malcolm Siegel, co-founder and director of Routed, a South African neutral cloud infrastructure provider, passed away.

The African scene

The African scene was dominated by activities involving the telecommunications players on the continent, particularly with individual countries trying to enforce foreign owners to locally list their shares in the relevant markets.

However, unlike many of the previous years, the acquisition/investment activity in Africa was more buoyant and included:

  • Actis acquiring a major stake in Nigeria’s Rack Centre;
  • The announcement that Bharti Airtel will sell all of its Ghana business to the government of that country;
  • Co-creation Hub’s acquisition of eLimu, a Kenyan educational platform;
  • MFS Africa, a pan-African cross-border payments leader, buying Beyonic, a digital payments management provider of business services for SMEs, fintechs and social impact entities across Africa;
  • MTN Group purchasing American Tower’s minority stakes in each of its joint ventures in Ghana and Uganda;
  • MultiChoice taking a 20% stake (R1.3 billion) in BetKing, a Nigerian online sports betting company;
  • UAE-based Network International taking over Direct Pay Online, an African payment service provider;
  • Orange Digital Ventures Africa investing $1.5 million in Youverify, a Nigeria-based digital identity and address verification start-up;
  • Paga, a Nigerian digital payments start-up buying Apposit, an Ethiopian software development company; and
  • Stripe acquiring Paystack, a Nigerian start-up that, like Stripe, provides a quick way to integrate payment services into an online or offline transaction by way of an API.

Other activities in Africa included:

  • Africell winning Angola’s fourth operating licence;
  • The listing of Airtel Malawi;
  • Airtel Africa announcing it will sell about 4 500 towers in a bid to accelerate the reduction of its debt;
  • Fudo Security entering the African market via its partnership with DT Networks and DataTegra;
  • Metrofile disposing of its 60% shareholding in Metrofile Zambia;
  • The announcement that MTN will exit the Middle East and focus on its burgeoning operations on the continent;
  • Orange making Morocco its African HQ;
  • Telkom Kenya calling off its merger with Bharti Airtel’s Kenyan unit; and
  • The Uganda Communications Commission giving MTN Uganda two years to list a minimum of 20% shares on the country’s stock exchange or face sanctions.

In addition, many new EMEA/regional/African appointments were made during the year, particularly in the telecommunications sector, as well as from companies such as Axis Communications, Cisco, Citrix, CommVault, Dell, Experian, HP, IBM, IFS, Microsoft, Nutanix, SAP, Seacom, Sophos, VMware, Xerox, YouTube and Yasawa’s Southern African arm.

The international scene

The international scene continues to be dominated by the big tech boys, ie, Alphabet, Amazon, Apple and Facebook, and their skirmishes with anti-trust regulators and the escalating investigations that are continuing to take place across the globe. In addition, the ongoing ‘trade wars’ that are disrupting the semiconductor industry is also having a negative effect on the market.

Despite the above, this year has again epitomised a healthy and growing ICT industry, with significant consolidations in many sectors. At least 15 or so technology or technology-oriented private equity companies have each been involved in at least four or five agreed acquisition deals and/or major investments in 2020. These include Accenture, Alphabet/Google, Apple, Atos, Cisco, Cognizant Technology Solutions, Facebook, IBM, Insight Partners, Intel, KKR, Microsoft, ServiceNow, Softbank, Synopsys, Tencent Holdings and Thoma Bravo.

The most significant happenings were the acquisitions/agreements to purchase by:

  • AMD of Xilinx ($35 billion);
  • Analog Devices of Maxim Integrated Products ($21 billion);
  • Cellnex Telecom of 25 000 towers from CK Hutchison (€10 billion);
  • Liberty Global of Sunrise Communications Group ($7.5 billion);
  • Nvidia of Softbank’s ARM unit ($40 billion);
  • Salesforce.com of Slack Technologies ($27.7 billion);
  • SK Hynix of Intel’s NAND memory chip business ($9 billion); and
  • S&P Global of IHS Markit ($44 billion).

In addition:

  • Huawei announced plans to sell its budget-brand smartphone unit Honor to a consortium led by handset distributor Digital China and the government of its hometown of Shenzhen ($15.2 billion);
  • Liberty Global and Telefonica SA announced an agreement to merge their operating businesses in the UK, ie, Virgin Media and O2, in a deal valued at $38 billion; and
  • NTT announced it would take full control of its wireless carrier business, NTT DoCoMo, in a deal valued at about $40 billion.

Other major international activities included:

  • The ANT Group having its China and Hong Kong listings suspended;
  • Apple being fined €1.1 billion by France’s competition watchdog;
  • Facebook paying $550 million to resolve a data privacy claim;
  • Google planning to pay $1 billion to publishers globally for their content;
  • Ingram Micro ‘returning to the US’ following its purchase by Platinum Equity Partners from China-based HNA Technology;
  • Intelsat entering Chapter 11 for a financial restructuring;
  • Paycom Software joining the S&P 500 Index;
  • Sprint and T-Mobile US completing their $26.5 billion merger; and
  • Xerox abandoning its bid for HP.

In addition, there were an unprecedented number of IPOs during the year, including the listings of 3Peak, Allegro Microsystems, Asana, Bentley Systems, BigCommerce, C3.ai, Cambricon Technologies, Chinadata, Datto, DoubleDown Interactive, Duck Creek Technologies, Dun & Bradstreet, Jamf, JD.com, JFrog, Kingsoft Cloud, Linkage Software, Lufax, Luminar Technologies, McAfee, NeoGames SA, Netease, Palantir, Pexip, PubMatic, QingCloud, Qualtrics, Quhuo, Rackspace Technologies, Shift4 Payments, Skillz, Snowflake, Sumo Logic, Telus, Ucloudlink Group, Unity Software, Via Optronics, Warner Music Group, Yalla Group and ZoomInfo.

Major international appointments included new CEOs at 3D Systems, 8x8, Alteryx, American Tower, Amkor Technologies, AT&T, AudioEye, Avnet, BCE, Beeline, Blackline, Boxlight, CalAmp, Canon USA, Capgemini, Cardlytics, Cellcom Israel, Cirrus Logic, Claroty, Cloudera, Coherent, CommScope, Communications Systems, Cornerstone On Demand, DAZAN Zhone Solutions, Disney, eBay, Envestnet, Exclusive Networks, Fastly, ForeScout, Gilat Satellite Networks, Groupon, Hitachi Vantara, IBM, Imagination Technologies, Infinera, Interface, Iomart, JazzCash, Lazada, Lockheed Martin, Mastercard, Microchip Technology, Netflix, Nokia, NXP Semiconductor, ON Semiconductor, One Stop Systems, Optiv Security, PacketFabric, Panasonic, Persistence Systems, Pinduoduo, Pine Labs, Plantronics, Poly, Pomeroy Technologies, Qumu, Sanmina, Sensata, Smart Global Holdings, SolarWinds, Tactile Systems Technology, Talend, TDC, Tele2 AB, Three UK, US Cellular, UTStarcom, Veon, Viasat, Virtana, Vonage, Western Digital, WeWork, Wirecard, Wipro, Workday and Zensar.

Unfortunately, there were several deaths, including those of:

  • Bill Coleman, co-founder of BEA, a middleware company and a former CEO of Veritas;
  • Dave Ducks, a former president and COO, co-chairman and vice-chairman of Ingram Micro;
  • Bernard Ebbers, ex-CEO of WorldCom;
  • Faqir Chand Kohli, an Indian software industry doyen and the first CEO of Tata Consultancy Services;
  • Curtis Sampson, founder of CSI;
  • James Robert Shaw, founder, executive chairman and former CEO of Shaw Communications; and
  • Jack Welch, a former CEO of GE.

In Nasdaq’s annual shuffle of its Nasdaq 100 index, Atlassian, Marvell Technology Group and Okta were among those added to the index, while Citrix Systems, Liberty Global and Take Two Interactive Software were among those removed. In addition, Lenovo retained the number one PC slot, Dell and HPE shared the number one server position, Apple remained as the number one technology company by revenue and the most valuable company by market capitalisation; and Yahoo Finance named Zoom Video Communications as its Company of the Year.

2021 and beyond?

The international scene next year looks to be another exciting one, with continued consolidations, particularly within the AI, IOT, semiconductor and telecommunications sectors. Also, expect to see the finalisation or otherwise of the Alphabet/Fitbit deal, the privatisation of Altice Europe, AT&T selling off its DirecTV unit, as well as the major deals involving several semiconductor companies; details of the IBM split; developments regarding the anti-trust cases involving Facebook and Google; new legislation specifically targeting the big tech boys; and some ownership changes to the Dell/VMware situation.

In addition, don’t be surprised at the demise or acquisition of some global names, including CyberArk, FireEye, GoPro, Proofpoint and Splunk; IPOs from many companies currently controlled by private equity firms as well as possible ones by Kioxia, Roblox, SUSE and Vodafone’s Vantage Towers; the continued pillage of the Israeli technology sector; several of the private equity companies growing their ICT portfolio; and further developments regarding the simmering China/USA technology ‘war’.

In Africa, expect further developments regarding the establishments of regional hubs; the partial opening up of the telecoms market in Ethiopia; STC finalising its deal for a stake in Vodafone Egypt; and more offices being opened on the continent by the big boys, as well as South African-based companies.

Locally, the focus will be on the future of Cell C, EOH and Sebata Holdings, MTN selling off some of its SA-based towers; further investment activity by Naspers/Prosus; as well as the proposed government ICT entities re-organisation.

Conclusion

The ICT industry continues to be alive and kicking, with a worldwide growth of 4% predicted for 2021, and, as usual, there are bound to be many shocks over the coming year as nothing is sacred in this industry. So don’t be surprised at what may happen, and don't take anything for granted.

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