Business Connexion (BCX) will operate as a standalone entity within Telkom, should the telco be successful in its R2.67 billion offer for the listed IT company.
This is according to Solidarity spokesman Marius Croucamp, who says the telco explained that some functions within its Cybernest unit will move to BCX. He notes Telkom is buying a profitable business and there will be no need to restructure BCX.
In the first half of the year, BCX's operating profit jumped 107% to R300.3 million, despite revenue only gaining 5.5%. The group's interim results, for the six months to February, show revenue gained to just over R3 billion, while net profit more than doubled, from R101.4 million to R224.4 million.
Eliminating several once-off items, such as the profit on its sale of QLink and amortisation of intangible assets, diluted headline earnings per share dropped from 19c to 15.6c, while basic earnings per share, on a diluted basis, gained to 52c, from 19.5c.
However, Croucamp says the union will ask the Competition Commission to protect jobs should it give the go ahead for the deal.
The Competition Tribunal quashed Telkom's initial bid seven years ago because it said the deal would have a detrimental effect on downstream competition. CEO Sipho Maseko has said the deal will give Telkom scale to expand into IT services and help reinforce its core connectivity business. "Telkom believes this combination will create a leading ICT company in SA, with unrivalled capabilities throughout the country."
Telkom, which is in a closed period, would not comment on its aim to have BCX operate as a standalone entity. Cybernest currently runs seven data centres around SA, and offers IT and cloud services. It falls under Telkom Business.
ITWeb understands BCX would be able to access Cybernest's infrastructure, and the move will scale up Telkom's IT offerings without the expense of a greenfields development, which would also be a lengthy process.
Separately, Telkom is in the midst of consulting managers about a retrenchment process that could see as many as 600 of its top staff laid off. This is due to its financial situation and the need to flatten structures.
The telco's results for the full year, which will be an improvement on 2013, will be published on Friday.
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