A lack of black economic empowerment (BEE) equity has had a negative impact on state-owned arivia.kom`s revenue, which shrank by 7.76% from R1 728 million to R1 594 million in the year to 31 March.
CEO Zeth Malele envisages having a BEE partner, but has no one in mind at present. He adds that in terms of strategy it is up to the shareholder entity, minister of public enterprises Alec Irwin, to decide. "Hopefully by August we will have a BEE partner."
Other factors that influenced the drop in revenue included lower IT spend in the group`s major customer base, Transnet and Eskom; ongoing commoditisation of infrastructure-type offerings; the convergence of telecoms and IT; and longer than anticipated lead times in closing deals in attempts to penetrate the African market.
Despite negative revenue growth, the group increased net profit by 14.2% from R55 million to R63 million, but cash and cash equivalents fell by 14.7% from R241 757 to R206 174.
The increase in net profit despite the drop in revenue is due to the group focusing on the costs, says Malele.
Reduced revenues and money being spent on buying out legacies and working capital requirements hit cash equivalents, he adds. Bank balances, cash and funds on call slipped from R241.76 million to R206.17 million.
Arivia.kom wants to continue breaking into Africa in the coming financial year, believing the African IT infrastructure and solutions market is untapped and therefore encouraging.
However, Malele says that although there is opportunity, Africa has its challenges and political instability is a problem.
On the local front, arivia.kom is looking to diversify its client base.
"We need to diversify so that we can instill confidence in our customers by demonstrating success in both the public and private sectors," says Malele.
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