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2017: a vibrant year for the ICT industry

ICT activity in Africa continues to grow, with offices sprouting on the continent from companies like Intelsat, Oracle and Syspro.

2017 was a vibrant and exciting year for the technology industry, with growth of 3.3% expected worldwide and 2.4% locally. The stock markets have also been buoyant, with record levels having been seen in SA, Europe and the USA, and levels not seen for many years in the Far East.

The international market was dominated by an unprecedented number of acquisitions by Accenture; the African market by several telecommunications consolidations; and the local market by the recapitalisation of Cell C following the significant investment in it by Blue Label.

As has been the norm for the past few years, 2017 has seen numerous start-ups; a significant number of IPOs both in the USA and elsewhere; heavy private equity activity; and a feverish merger/acquisition scene. China has been particularly active along with many other countries in Asia; and even the South African scene has been more buoyant than in the past few years and has even seen a new technology listing.

From a business perspective, cost containment still remains a high priority, with the areas of BI/analytics and security - especially cyber security - key for many organisations. From a technology perspective, artificial intelligence, the continued move towards the digital world, and the rapid growth regarding the Internet of things continues to head-up the list of opportunities going forward.

In addition, consolidation continues apace, particularly in the BI/analytics, security, semiconductor and telecoms/communications fields; and many of the 'bigger' boys continue to streamline their operations by either splitting off, listing or selling off non-strategic elements of their businesses.

Local scene

This year has been a mixed one for ICT listed companies. 4Sight Holdings joined the JSE, the first new technology listing for some time, and Capital Appreciation moved to the software and services sector of the board. Altron's N shares; Datacentrix, following its acquisition by Pinnacle; and M-FiTec were delisted. In addition, Pinnacle was rebranded as Alviva; and Prescient was renamed as PDT and also moved sectors within the JSE.

There were a handful of new entrants and new companies launched into the local market, although some indirectly, including CRMNEXT (India), Logicalis (part of Datatec) and TIA Technology (Denmark).

As usual, there was much merger/acquisition and investment activity, including 2U buying GetSmarter; 4Sight Holdings buying Age and BluESP; Adapt IT taking over Micros SA and CDR, including several subsidiaries and associate companies; Altech Netstar acquiring Fleet Logistics; Altron purchasing Phoenix Software but disposing of its interest in Powertech Transformers Group; Alviva taking a 51% shareholding in Sintrex and 75% of Gridcars; Ansys acquiring LAWtrust and Profitek; Blue Label Telecoms acquiring 3G Mobile (R1.9 billion); Cardtronics (UK) buying Spark ATM Systems; Cognosec taking over Intact Software Distribution; Convergence Partners selling off its 25% shareholding in Dimension Data to NTT; Curve Group buying Paperless Software and Silverlining Technology; Datatec's Logicalis Group taking a majority stake in Packet Systems Indonesia and a 51% stake in NubeliU (South America); Decision Inc. buying ABM Systems; dormakaba SA taking over AWM360 Data Systems; DXC Technologies taking over Datatec's (Logicalis) service management consulting division; EOH buying the Cornastone Group of companies; HeroTel acquiring Border Internet, HX-Systems, IGEN Wireless, Safricom North West, Sonic Telecoms and Xpress Network Solutions; IYAVAYA HR Solutions taking a 51% stake in Bytes Conference Centre business; Jasco Electronics buying Reflex; Kerridge Commercial Systems acquiring IQ Retail; Liquid Telecom completing its acquisition of Neotel; Metrofile acquiring Tidy Files; Net 1 investing 30% in Bank Frick and & Co (Liechtenstein) and 49.6% in DNI-4PL Contracts; MTN taking a 49% stake in Iranian Net; Naspers buying the remaining 60% of Takealot and investing R1.6 billion in Remitly (India) and in Swiggy (India); PwC acquiring Agilitude; Rectron taking a majority stake in Palladium; Seacom buying MacroLan; Synnex buying Datatec's Westcon-Comstor Americas business; Tel taking over Jireh Technologies; Velocity Group acquiring MLC Solutions; Vumatel buying a large portion of Link Africa's home fibre infrastructure; and Vulatel acquiring Dimension Data's fibre and wireless business that was formerly called Plessey.

Other key events included the completion of the Liquid Telecom/Neotel deal; AG Mobile going into liquidation; Blue Label finishing a recapitalisation of Cell C; the European Patent Office granting Entersekt patents for two of its foundational technologies; JMR Software opening a UK office; Lycamobile launching its MVNO services on Cell C's network; QbTech changing its name to MCI IT; Sekunjalo Technology Solutions being renamed AYO Technology Solutions; Wireless Business Solutions, the holding company of iBurst and Broadlink, being rebranded as Rain; and SAP and Software AG undertaking internal investigations regarding alleged 'Gupta kick-backs'.

HP regained the number one PC slot and remained the number one server company.

Key appointments during the year included new country managers/GMs/CEOs/MDs at many companies, including Altron, Ansys, BCX, Broadband Infraco, Ellies, EOH, Experian, Gijima, HPE, ICASA, me & you mobile, MTN Group, MTN SA, Neotel, Net 1, Oracle, Orange Business Services, Panasonic, Rain Mobile, SA government ministries, SAP, SAS, Stella Capital Partners and Trustlink; while Asher Bohbot (EOH), Serge Belamant (Net 1), Christo Davel (22seven), Arnold Fourie (Pinnacle/Alviva), Bill Venter (Altron) and Eileen Wilson (Gijima) were amongst the key departures/resignations/retirements. In addition, 2016 also saw the passing of Richard Hurst, a respected ICT industry analyst and management consultant, and Mark Perry, a well-known industry personality.

From an awards viewpoint, the key winners included Shashi Hansjee, CEO of Entelect as the IITPSA's IT Personality of the Year for 2017, and Alec Joannou, global CIO of Sasol, as the Visionary CIO for 2017.

African scene

The African scene was again dominated by the telecoms industry and, in particular, the many new mobile initiatives launched.

As the African market continues to mature, the emergence of potential regional hubs continues apace, with Kenya emerging as the centre for East Africa and a duel between Ghana and Nigeria for West Africa. North Africa continues to fall under the Middle East/Egypt. As was the situation previously, there are still no IT companies listed in the current 'Top 500 Companies in Africa' list from outside SA, and still only a handful of telecoms companies included.

However, ICT activity on the continent continues to grow, with many new offices being established by companies such as Intelsat, Oracle and Syspro.

Other activities in Africa included BringCom acquiring Datanet.Com; the merger of Millicom's interest in Ghana with Bharti Airtel's operation in that country; Direct Pay Online Group taking over PayThru, Setcom and Virtual Card Services in Botswana, Namibia and SA; Etisalat Nigeria changing its name to 9Mobile; iWayAfrica Kenya acquiring the terrestrial and VSAT customer base of Callkey Networks; Mauritius Telecom becoming MyT; MTN increasing its stake in the IHS group to 29% and launching a new incubator programme for tech start-ups in the Ivory Coast; Musa Group (SA) buying Swanib Cables (Namibia); Silvertree Internet Holdings acquiring TopCheck (Nigeria); Uganda Telecom being taken over by the Ugandan government; Vodacom acquiring Safaricom, listing in Tanzania but closing its Cameroon operation; and the Wari Group acquiring Millicom Tigo in Senegal.

In addition, many new EMEA/regional/African appointments were made during the year, particularly in the telecoms sector as well as from companies such as 3M, BandwidthX, Cardtronics, Cisco, Hitachi Data Systems, Hitachi Vantara, Jasco, Microsoft, NetApp, Philips Africa, Riverbed, Sage (UK), SAP, Syspro and Westcon-Comstor Southern Africa.

International scene

This year has again epitomised a healthy, thriving and growing ICT industry with significant consolidations in many sectors, although the most significant happenings were the finalisations of the $34 billion CenturyLink/Level 3 deal; Verizon's Yahoo deal; and Toshiba's sell-off of its chip business for $17.4 billion.

Nine technology companies have each been involved with at least four or five acquisitions/major investments in 2017. These companies were Accenture (with over 20 acquisitions), Alibaba, Alphabet/Google, Apple, Cisco, including AppDynamics ($3.7 billion) and BroadSoft ($1.9 billion), IBM, Microsoft, Softbank (including a $5 billion investment in Didi Chuxing, a $4 billion investment in Nvidia, a $3 billion investment in WeWork, and the $3.3 billion purchase of Fortress Investment Group), and Tencent Holdings. In addition, there were several significant deals, including Amazon's $13.7 billion of Whole Foods Market; Crown Castle acquiring LTS Group Holdings ($7.1 billion); the $7.6 billion acquisition by Digital Realty Trust of fellow data centre operator DuPont Fabros Technology; the $14.6 billion acquisition by Discovery Communications of Scripps Network Interactive; Hellman and Friedman buying Nets A/S ($5.3 billion); Intel buying Mobileye ($15.3 billion); KKR buying Hitachi's chip-making equipment and video solution unit ($2.3 billion); Marvell Technology Group swallowing up Cavium ($6 billion); Sierra Wireless buying the assets of GlobalTop Technology's Global Navigation Satellite System embedded module business ($3.2 billion); United Internet acquiring Drillisch (EUR8 billion+); Vantiv taking over Worldpay (lb7.7 billion); and Verizon Communications buying Straight Path ($3.1 billion). In addition, there was an $11.7 billion investment in China Unicom involving Baidu, Didi Chuxing, JD.com and Tencent.

Other major international activities included Avaya and Ciber filing for Chapter 11; Google being fined EUR2.42 billion by the EU; HP buying Samsung's printer business; Lenovo buying Fujitsu's PC unit; McAfee operating again as a standalone company; Qualcomm being embroiled in some major lawsuits; Vodafone merging its Indian interest with Idea Cellular; and the remainder of Yahoo becoming Altaba.

However, there were an unprecedented number of IPOs during the year, including the listings of Alteryx, Altice USA, Appian, Aquantia, Bandwidth, Best, China Literature, Cloudera, ForeScout Technologies, Jianpu Technology, MongoDB, MuleSoft, Okta, Netmarble Games, Play (Poland), Presidio, Qualtrics, Razer, Roku, Rovio Entertainment, SailPoint Technologies, Smart Global Holdings, SNAP, Sogou, Switch, Tintri, Veritone, Wideopenwest and Yext.

Major international appointments included new CEOs at Autodesk, Citrix Systems, Cincinnati Bell, CoreLogic, Epicor, Equifax, F5 Networks, GoDaddy, HPE, Infosys, j2 Global, Micron Technology, MobileIron, Mphasis, Seagate Technology, ServiceNow, SES Networks, SMIC, Synchronoss Technologies, Syntel, T-Systems, TalkTalk, Telesoft, Veeam Software, Xperi and Xplore Technologies.

Key departures/resignations included John Chambers (Cisco), Michel Combes (Altice), Travis Kalanick (Uber), Marissa Meyer (Yahoo), and Meg Whitman (HPE); and, unfortunately, the deaths of Sir Chris Bland (ex-chairman of the BT Group), Ikutaro Kakehishi (an electronic music pioneer and founder of Roland), Masaya Nakamura ('Father of Pac-Man'), Anand Nallathembi (ex-CEO of CoreLogic), and Tom Olafson (ex-CEO of Epiq Systems).

During the year, HP regained the number one PC slot and remained the number one server company; while Apple remained the number one technology company by revenue.

In addition, Fortune magazine named Jensen Huang, CEO of Nvidia, as its 'Business Person of the Year'. In the annual re-ranking of the Nasdaq-100 Index, comprising the 100 largest non-financial stocks listed on the Nasdaq Stock Market, ASML, Cadence Design Systems, Synopsys, Take-Two Interactive Software and Workday joined the index, and Akamai Technologies, Discovery Communications and Viacom left the index.

2018 and beyond

The international scene next year looks to be another exciting one, with continued consolidations, particularly within the 3D printing, semiconductor and telecoms industries, in addition to the finalisation or otherwise of the proposed $85 billion deal involving AT&T and Time Warner; and the potential deals involving Qualcomm, NXP Semiconductor and Broadcom. Also, many of the smaller players in the AI and cyber security sectors are likely to be acquired.

Don't be surprised at the demise or acquisition of some global names, including AMD, CyberArk, Fitbit, GoPro, Netflix, Proofpoint, Snap, Twitter and Weibo; IPOs from many companies currently controlled by private equity firms, as well as ones from Avast Software, Spotify and Xiaomi; GE disposing of its ICT interests; the continued pillage of the Israeli technology sector; the emergence of more conglomerates that have a growing ICT portfolio; and more from the ongoing legal battles involving Apple, Qualcomm and Samsung.

In Africa, expect further developments regarding the establishments of regional hubs; further telecoms listing in Tanzania; MTN listing in Nigeria; Veon swallowing more of Orascom Telecom; Zambia awarding a fourth mobile licence; and more offices being opened on the continent by the 'big boys' as well as South African-based companies. In addition, expect listings in London and/or New York from Eaton Towers, Econet, Helios Towers Africa and IHS Towers.

Locally, the focus will be on government's partial sell-off of its stake in Telkom SA and the future of Infraco Broadband; BCX selling off some non-strategic assets; the resolution of the T-Systems/Transnet contract enquiry; the entry of Epoq Legal (UK) into the country; the launch of EvoNet's telecoms initiative; and developments regarding the MTN/Turkcell lawsuit.

In addition, look out for the possible delisting of TCS and the further expansion of ICT interests by many of the conglomerates.

Conclusion

The ICT industry continues to be very much alive and kicking, with a worldwide growth of 4.3% and a South African growth of 3.4% expected in 2018. 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.

Paul Booth

Paul Booth is an independent commentator who looks for significance in what ICT vendors haven’t said.

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