Listed investment company Sekunjalo will continue to target acquisitions in the ICT sector.
CEO Khalid Abdulla says: “In the next months and year we will be quite active in the ICT space.” He explains that ICT is an important growth area for the company, and there are opportunities in the public and private sector locally and on the continent.
Abdulla adds that it can now “cherry-pick” assets as companies are divesting from non-core divisions at reasonable prices.
The firm, which has a major interest in the fishing industry, is keen to grow ICT to more than a 30% share of its revenue, says Abdulla. Sekunjalo has four ICT divisions: Fios, Saratoga, Digital Matter and Health System Technologies.
Sekunjalo is also the black economic empowerment partner of global telecommunications giant British Telecom (BT), for its South African operations. The company has a 30% stake in BTSA.
Recession woes
The economic slowdown has meant plans to spin off and separately list the ICT division - Sekunjalo Technology Solutions Group - will have to be delayed.
Abdulla says the company is still keen to take the Technology Solutions Group division to the market, but will wait two or three years for the economy to recover first.
During the year to August, Sekunjalo was hit by the recession, with revenue dropping from R601 million to R405.9 million. It made a R58.8 million loss, compared to profit of R5.6 million last year.
Sekunjalo Technology Solutions Group, a wholly-owned subsidiary, reported operating profit of R12.8 million, which was down on last year's R15.2 million. The drop was mostly due to it selling out of Synergy Computing at half-year, and the global downturn, which trimmed ICT spending.
New opportunities
The division has been restructured to be more flexible, and allow it to distribute new products and look to new market segments with the departure of Synergy, Sekunjalo says.
Abdulla sees growth ahead. He says the company's relationship with BT is ahead of budget, and will grow exponentially in the next two to three years.
Sekunjalo provides BT services such as broadband, fixed-to-mobile and fixed-lines to enterprises and consumers.
Abdulla adds that there is good potential in Africa to expand the venture north of SA's borders.
He also believes Health System Technologies is well-positioned to take advantage of government's mooted National Health Insurance plan. The division provides hospitals with an integrated patient-management system and also collates patient records.
It has a long-term Western Cape tender to provide services to about 20 hospitals, and is in talks with Gauteng to provide a similar service.
However, after the end of its financial year, its joint venture with the Baoki Consortium, to implement the Hospital Information and Gauteng Electronic Health Record systems, for the Gauteng Department of Health, was cancelled. Baoki cancelled the contract due to non-payment by the department.
Abdulla says negotiations are under way to resolve the situation, although the company has reserved its rights and sought legal advice.
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