No arivia sale this year

By Martin Czernowalow for arivia.kom
Johannesburg, 02 Dec 2008

The sale of state IT services company arivia.kom has been delayed - again. It now seems current arivia shareholders, Transnet and Eskom, will only announce the preferred bidder, for 100% of arivia, in January.

T-Systems and Dimension Data remain in the running for the state services provider, which was put on sale at the beginning of 2006.

This is the latest in a string of delays since the Department of Public Enterprises announced the company would be privatised. Arivia mainly provides IT services for Transnet and Eskom, which hold 41.5% and 58.5% of the company, respectively.

A source close to the sale states bidders received a letter last week, informing them that any announcement of the preferred bidder has been deferred until January 2009.

Bidders were previously informed that a preferred bidder would be announced - or at least unofficially communicated - before 30 November, and that the sale would most likely be completed before the end of the year.

However, it now appears that Eskom and Transnet are aiming to conclude the sale by 1 April 2009, but sources say this is a tight timeline, considering the upcoming festive season.

Once a preferred bidder is announced, it will enter a contractual negotiation phase with the shareholders, before the sale is officially announced.

From the start, sources close to the privatisation have expressed reservations about arivia's attractiveness to potential buyers, saying it would most likely be a hard sell.

However, in order to attract bidders, government included two large-scale contracts with the company. The five-year outsourcing agreements are worth around R400 million and R200 million a year for Eskom and Transnet, respectively.

Constant delays in the sale have fuelled market speculation about the state of the company and the viability of the privatisation. At one stage, industry observers were sure the deal had been derailed, while in July this year rumours abounded that the sale had already been concluded.

Transnet and Eskom did not comment by the time of publication.