The long-awaited joint venture (JV) between AST-A and ABSA has been finalised, creating a new company that is expected to have an annual revenue of R1 billion within two years.
Based on a five-year contract with ABSA valued at between R350 million and R400 million, the JV will provide desktop and distributed systems outsourcing services.
The still to be named company will be operated as a division of AST-A with AST-A management, while ABSA will provide non-executive directors. ABSA has a 30% stake in the JV.
Combining the capabilities of both ABSA Desktop Computing Services and AST Desktop Services, the new company will continue to service the distributed system throughout the ABSA Group, consisting of around 30 000 PCs, servers and notebooks, and some 1 500 large area networks, in addition to servicing AST-A`s current clients in Southern Africa.
Jan van Zyl, CEO of AST-A, says the company expects to see the results of the substantial deal in the next financial year as it only becomes effective on 1 May and AST-A closes its books on 30 June.
"We won`t see an effect on earnings per share (eps) this year-end, but the annuity stream on the division will be up to 65% by next year, so we are expecting a healthy effect on next year`s eps," says Van Zyl.
"AST-A was selected because of its proven ability to consistently reduce total cost of ownership while improving service levels in large-scale outsourcing projects," explains Bert Griesel, executive director of ABSA.
"AST-A also has exceptional knowledge of and experience in managing transition processes, as will be followed when bringing together staff of both AST-A and ABSA in the new company. The high level of cultural compatibility between ABSA and AST-A will ease the transition."
"Our strategy is to enter long-term strategic deals with our customers, reflected in the ABSA deal," says Van Zyl. "This has paid off in the past looking at what we`ve accomplished with both Iscor and Anglo Gold. The fact that large blue-chip companies have decided to go with us shows the level of respect AST-A has within the market," he concludes.
Share
