Review of 2021: The ICT industry continues to surprise
The international market was dominated by the increasing involvement of the investment community in the ICT sector, with a feverish merger/acquisition scene.
2021 was yet another unbelievable year for the technology industry. According to Gartner, IT spending was expected to be up 9.5% from 2020.
The international market has been dominated by the increasing involvement of the PE/investment community in the ICT sector, an unprecedented acquisition/investment spree by Accenture; the Synnex/Tech Data merger; and the ongoing global investigations/fines of the ‘big tech boys’.
Locally, it was the acquisition/investment activity of Naspers and/or Prosus.
As has been the norm over the past few years, 2021 has again seen the emergence of numerous start-ups; a significant number of IPOs globally; heavy private equity activity; and a feverish merger/acquisition scene.
From a business and technology perspective, cyber security, AI/analytics, the continued move towards the digital world, the internet of things and robotics are still the key short-term 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 boys’ 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 again been a positive one, with the listing of Karoooo on Nasdaq and the JSE following its acquisition of Cartrack Holdings and EOH making a secondary listing on the A2X. However, Cartrack Holdings has been delisted, along with the expected delisting of Adapt IT by year-end.
Moreover, there were a handful of new entrants appearing in the local market, although some indirectly, including AAC Clyde Space, a Swedish space technology company; Aten International, a global provider of audio visual and IT connectivity solutions; Novomind, a German software developer of customer service solutions; Poket Mobile, a mobile virtual network operator; Nigeria-based Paystack, the fintech start-up acquired last year by Stripe; Snyk, a cloud native application security company; ThreatConnect via a strategic partnership with BUI, Microsoft’s largest security and consulting partner in SA; Wahed, a halal fintech firm; and Zoho, an Indian-based technology firm that makes web-based business tools.
As usual, there was healthy merger/acquisition, proposed acquisition and investment activity, including multiple ones by Datatec and Naspers/Prosus.
The ongoing chip shortage continues to have a negative effect on the market, as does China’s tightening of the reins on its technology companies.
Other deals, other than by the companies mentioned earlier, included the acquisitions by +OneX of Code Maven, a software specialist and Triple H Cloud Services, a cloud specialist; Acronis of Synapsys, its long-time partner located in Cape Town; Alaris of UK-based Linwave Technology; Altron getting Etion’s LAWtrust (R245 million); Dimension Data buying Acacia Cloud Solutions; EOH disposing of Sybrin in a R410 million deal with a consortium led by One Thousand & One Voices Management; Finclusion Group purchasing a strategic stake in HelloHR, a South African payroll software start-up; Frogfoot Networks buying the fibre-to-the-home assets of Link Africa Western Cape; iSON Xperiences of Altron People Solutions’ BPO and Customer Experience Technology business; LRMG, an SA-based management consultancy, of Altron People Solutions’ Learning Solutions business; Jasco Networks entering a sale of business agreement with the Reach Group for the former’s Property Technology Management’s business; Karooooo of Picup Technologies, an on-demand logistics provider; MetroFibre buying Link Africa’s fibre-to-the-home network in Gauteng and Metrofile of IronTree Internet Services; the MTN Group selling its 20% shareholding in Belgacom International Carrier Services SA to Proximus for (R1.8 billion); Net1 selling its remaining interest in Bank Frick back to The Kuno Frick Family ($30 million) but signing a definitive agreement to acquire the Connect Group; Skynamo of mSeller, a UK-based mobile field sales technology provider; Telemasters purchasing the remaining shares of ConexLink it doesn’t already own; TFG Labs acquiring the Flat Circle team, a specialist mobile app development agency; Vodacom Group buying a co-controlling equity stake in Community Investment Ventures Holdings’ fibre assets (Dark Fibre Africa and Vumatel) (R13.2 billion) and a binding agreement to acquire a 55% shareholding in Egypt Telecommunications SAE ($2.7 billion); Volaris, an operating group of Canada-based Constellation Software, acquiring Adapt IT; and Australia-based Zip intending to fully acquire Payflex, a South African buy now pay later fintech.
Investments were made by Accel-KKR in Entersekt, a device identity and authentication solutions provider; Adumo in SwitchPay, a provider of alternative payment solutions for consumers both in-store and online; Imperial’s Market Access business in FigJam (24%); and One Thousand & One Voices in Digital Ecosystems KwaZulu-Natal.
Other key events included Allied Electronics changing its name to Altron; Ellies Electronics liquidating its manufacturing segment; MTN SA finalising its passive tower infrastructure transaction with IHS Towers (R6.4 billion); SkyNet’s operations in SA, Namibia, Mozambique, the UK, Belgium and Germany being acquired by the South African management team, together with RMB Ventures, Bopa Moruo Private Equity and New GX Capital Holdings; and Virgin Mobile closing its doors in SA.
Key appointments during the year included a new minister and deputy minister at the Department of Communications; and new country managers/general managers/CEOs/MDs at many companies including Adapt IT, Altron Nexus, Altron Security, Blacfox, Dark Fibre Africa, Etion, ETS Innovations, HPE (acting), IoT.nxt, Iron Mountain SA, Jasco, Mara Phones South Africa, MWeb, Net 1, Quintica SA, Simfy (Ayoba), SoftwareONE, Takealot, Tarsus Technology Group, Telkom SA (designate), Workday SA, xneelo and Zutari.
Rudi Jansen, a former CEO of MWeb; Hlengiwe Mkhize, an ex-deputy minister of telecommunications and postal services; Jabu Mabuza, a former chairman of Telkom SA; and Peter Riches, founder of Meta Group South Africa and an IT and business veteran, passed away.
The African scene was again 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 African Infrastructure Investment Managers, together with the management team of the new Onix Data Centres platform, taking a majority stake in Ngoya Etix DC (Ghana); Airtel Africa selling its Tanzanian tower operations to a joint venture owned by a subsidiary of SBA Communications and Paradigm Infrastructure ($175 million); BUI buying M2M Systems, a cloud solutions provider and fellow Microsoft Partner organisation based in Kenya; Convergence Partners entering into an agreement with Nasdaq-listed Inseego to acquire 100% of Ctrack’s operations in Africa and the Middle East; the acquisition by Exclusive Networks of Networks Unlimited, a major regional value-added distributor serving 38 national markets in Africa with cyber security and infrastructure solutions; the Ghana government acquiring AirtelTigo; Helios Towers signing agreements with Airtel Africa to buy its passive infrastructure operating companies in Madagascar and Malawi and an exclusive MOU for the potential acquisition of its passive infrastructure assets in Chad and Gabon; Liquid Telecom buying the MEA operations of Quattro Business Solutions; Network International, an enabler of digital commerce across the Middle East and Africa, buying the DPO Group, Africa’s largest and fastest-growing payment service provider ($291.3 million); and Seacom purchasing Hirani Telecom’s metro fibre networks.
Other activities in Africa included the Africa Coast to Europe (ACE) submarine cable going live; Africell emerging as Angola's fourth mobile operator; Beeline Telecom becoming Zambia’s fourth mobile operator; Econet Group planning to create a new entity, Cassava Technologies, headquartered in London, which will bring together Econet’s digital services and infrastructure businesses, including those in fibre broadband, data centres, renewable energy, security and fintech, under one entity; Ethiopia awarding a new telecommunications licence to a consortium that includes the Vodacom Group; Infratel Corporation and Airtel Networks Zambia signing a tower co-location agreement that will allow Airtel to lease multiple installation-ready towers across the country’s 10 provinces; InnoVent, an IT financing and leasing specialist opening an office in Lagos, Nigeria; the subsidiaries of Maroc Telecom being rebranded as Moov Africa; Millicom pulling out of Africa, as the group shifts to a sole focus on Latin America and agreeing to sell its Tanzania operations to Madagascar-based pan-African operator Axian; MTN listing its Rwandan and Ugandan operations in those countries but exiting Yemen; MultiChoice taking an additional 29% investment in Blue Lake Ventures, a pan-African sports betting and entertainment business; OPay, an Africa-focused digital payment start-up securing a $400 million in its latest funding round led by SoftBank Vision Fund 2; Pay@, a South African payment aggregator and payment solutions provider preparing to establish a presence in Angola, Mozambique and Zambia; South Sudan launching its first locally owned telecommunications operator, Digitel Network; the submarine cable linking SA to the islands of Madagascar, Reunion and Mauritius going live; and Twitter opening an office in Ghana.
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 Box, Citrix, Commvault, Dimension Data, Google Cloud, HP, IBM, Inq, Jumia Ghana, Nutanix, Seacom, Splunk, Veeam Software and Xerox.
The international scene continues to be dominated by the ‘big tech boys’, ie, Alphabet, Amazon, Apple, Facebook and Microsoft, particularly regarding their skirmishes with anti-trust regulators and the escalating investigations that are continuing to take place across the globe.
In addition, the ongoing chip shortage continues to have a negative effect on the market, as does China’s tightening of the reins on its technology companies and, specifically, their acquisitions and potential listings.
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/investment companies have each been involved with at least four or five agreed/proposed acquisition deals and/or major investments in 2021.
These include Accenture, Alphabet/Google, Apple, Bentley Systems, Cisco, Cognizant Technology Solutions, Francisco Partners, Help/Systems, IBM, Insight Partners, KKR, Microsoft, Softbank, Thoma Bravo and Vista Equity Partners.
The most significant happenings were the acquisition/agreements to purchase by Advent International of McAfee, the cyber security firm ($14 billion); American Tower of CoreSite Realty, a data centre operator ($10.1 billion) and Telefonica’s mobile phone masts owned by its Telxius division in Europe and Latin America ($9.41 billion); Apollo Global Management and Lumen Technologies of Lumen’s ILEC assets and all associated operations across 20 states ($7.5 billion); Blackstone of International Data Group, a provider of market and data intelligence and research for the tech sector ($1.3 billion) and data centre operator QTS Realty Trust ($10 billion); Emerson Electric, which plans to merge two of its software businesses with smaller rival Aspen Technology ($11 billion); Ericsson of Vonage, a cloud communications firm ($6.2 billion); Intuit of Mailchimp, a digital marketing company ($12 billion); KKR and Global Infrastructure Partners of CyrusOne ($15 billion); Microsoft of Nuance ($19.7 billion); NortonLifeLock of UK-based Avast, a cyber security firm ($8.6 billion); Okta of Auth0, maker of identity verification software ($6.5 billion); Panasonic of Blue Yonder ($7.1 billion); Permira of Mimecast, the e-mail security company ($5.8 billion); Rogers Communications of rival Shaw Communications (C$20 billion); Square of Australia-based Afterpay, an instalment payment company ($29 billion); Teledyne Technologies of FLIR Systems, a thermal image provider ($8 billion); Thoma Bravo of Medallia, an enterprise software firm ($6.4 billion), Proofpoint ($12.3 billion) and RealPage ($10.2 billion); Veritas Capital of Perspecta, a provider of government IT services ($7.1 billion); and Viasat of Inmarsat ($7.3 billion).
Other major international activities included the splitting of IBM; Ingram Micro officially closing its acquisition by Platinum Equity ($7.2 billion); Salesforce closing its $27.7 billion Slack acquisition; the completion of the Synnex/Tech Data merger ($7.2 billion); and the spin-off from Dell of VMware.
In addition, there were an unprecedented number of IPOs during the year, including the listings of ACM Research (China’s Nasdaq like Star market), Alfi (Nasdaq), Alkami Technology (Nasdaq), Alphawave (London), Amplitude (Nasdaq), AppLovin (Nasdaq), AutoStore (Oslo), AvePoint (Nasdaq), AvidXchange (Nasdaq), Backblaze (Nasdaq), Baidu (HK), Bilibili (HK), Braze (Nasdaq), BuzzFeed (Nasdaq), China Telecom (Shanghai), Clear Secure (NYSE), Clearwater Analytics (NYSE), Cloud Village (Hong Kong), Confluent (Nasdaq), Coupang (NYSE), Coursera (NYSE), Darktrace (London), Didi Global (NYSE), Digital Core REIT (Singapore), DigitalOcean (NYSE), DLocal (Nasdaq), DoubleDown Interactive (Nasdaq), DoubleVerify Holdings (NYSE), Dye & Durham (Toronto), Enfusion (NYSE), EngageSmart (NYSE), EverCommerce (Nasdaq), Exclusive Networks (Paris), Flywire (Nasdaq), ForgeRock (NYSE), Freshworks (Nasdaq), Gitlab (Nasdaq), Glimpse Group (Nasdaq), GlobalFoundries (Nasdaq), HashiCorp (Nasdaq), HireRight (NYSE), Informatica (NYSE), Intapp (Nasdaq), IonQ (NYSE), ironSource (NYSE), Kaltura (Nasdaq), Jocom International Holdings (Singapore), Kakao Pay (Seoul), Karooooo (Nasdaq), KnowBe4 (Nasdaq), Krafton (S Korea), Kyndryl (NYSE), Marqeta (Nasdaq), Mitratel (Indonesia). Monday.com (Nasdaq), MotorK (Amsterdam), Nazara Technologies (India), Nexters (Nasdaq), Outbrain (Nasdaq), OVHcloud (Paris), Paymentus (NYSE), Payoneer (Nasdaq), Paytm (India), PowerSchool Holdings (NYSE), Procore (NYSE), PT Bukalapak.com (Indonesia), Riskified (NYSE), Roblox (NYSE), Sentinel One (NYSE), SimilarWeb (NYSE), Skywater Technology (Nasdaq), Softchoice (Toronto), Softline (London & Moscow) Sprinklr (NYSE), SquareSpace (NYSE), SUSE (Frankfurt), TaskUs (Nasdaq), The Glimpse Group (Frankfurt), Thoughtworks (Nasdaq), Toast (NYSE), Udemy (Nasdaq), UiPath (NYSE), Vantage Towers (Frankfurt), VTEX (NYSE), Weave Communications (NYSE), Weibo (Hong Kong), Wise (London), Zenvia (Nasdaq) and Zeta Global Holdings (Nasdaq).
Major international appointments included new CEOs at Acronis, Amazon, Anexinet, Ant Group, Applause, Arcserve, Arctic Wolf, Atos, Barracuda Networks, Beeline Georgia, Beeline Uzbekistan, Bouygues Telecom, ByteDance, Cadence Design Systems, CARFAX, Ceragon Networks, Cerner, Citrix Systems (interim), CloudWalk Technology, CompassMSP, CSS Corporation, CTS Group, Cybrary, D4t4 Solutions, Digimarc, Dynatrace, Emirates Integrated Telecommunications Company (Du), Exabeam, FireMon, ForeScout, GameStop, Inmarsat, Instructure Holdings, GFI Software, GitHub, Groupon, GSTechnologies, Infineon Technologies, InterDigital, Insight Enterprises, InterVision, IPG Photonics, IQE, Ivanti, KKR, L&T Technology Services, L3Harris Technologies, Lacework, Logically, Lycamobile, MTBC, Open Systems, Parler, Partner Communications, Paytm, Pocket Aces, Qualcomm, Qualys, RealPage, Redline Communications, Riskified, Riverbed, Rogers Communications (interim), Salesforce.com (co-CEO), Samsung, SeaChange International, SecureWorks, Sierra Wireless, Sky Italia, Splunk (interim), STL, StorMagic, Synchronoss Technologies, TD Synnex, Teads SA, Tencent Music, TikTok, Toshiba (Interim), Twitter, UTStarcom, Virgin Media O2, Virtusa VMware, VTEX, VVDN Technologies, Yahoo and Zuora.
Unfortunately, there were several deaths, including those of Philippe Courtot, a former CEO of Qualys; Bruce Geier, a founder of the Technology Integration Group; Charles Geschke, a co-founder of Adobe; John McAfee, the anti-virus software pioneer; Bhupender Saharan, co-founder and CEO of VVDN Technologies; Sir Clive Sinclair, the home computing pioneer; and Tom Richards, an ex-CEO of CDW.
It was announced that in Nasdaq’s annual shuffle of its Nasdaq 100 Index, Datadog, Fortinet, Palo Alto Networks and Zscaler were among those added to the index, while CDW, Cerner and Check Point Software Technologies were among those removed.
In addition, Lenovo retained the number one PC slot, Apple remained the number one technology company by revenue and as the most valuable company by market capitalisation (although briefly overtaken by Microsoft during Q4); and Yahoo Finance named Microsoft as its Company of the Year.
2022 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 finalisations or otherwise of the KKR/Telecom Italia, Microsoft/Nuance and Nvidia/ARM deals; Facebook offloading GIF-maker Giphy as ordered by the UK competition board; further developments regarding the anti-trust cases involving Facebook and Google; and new legislation specifically targeting the ‘big tech boys’.
In addition, don’t be surprised at the demise or acquisition of some global names, including Global Switch Holdings and Radware; IPOs from many companies currently controlled by private equity firms as well as possible ones by Mobileye, Modzy, Rigetti Computing, Samsara and SenseTime; 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’ and China’s rule tightening regarding acquisitions and IPOs.
In Africa, look out for the Djibouti government selling a significant minority stake in Djibouti Telecom; the further opening up of the telecoms market in Ethiopia; and more offices being opened on the continent by the ‘big boys’ as well as SA-based companies.
Locally, Alaris may be delisted following an offer to shareholders; look out for the focus on the future of Cell C and EOH; further investment activity by Naspers/Prosus, as well as the proposed government ICT entities reorganisation.
In conclusion, the ICT industry continues to be very much alive and kicking, with a worldwide growth of 5.5% predicted for 2022. 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 or take anything for granted.