ICT systems integrator BCX has picked cyber security, IT solutions and advisory services as the new growth vectors that will be instrumental in remodelling the business.
BCX – a Telkom company – has been on the backfoot for some time, and is now seeking market glory, and is increasingly seeing cyber security and IT solutions as the new growth frontier.
The company has been limping in the past few years, and in the current reporting period, it recorded muted growth of 0.8%, with revenue coming in flat at R6.9 billion.
Converged communications revenue declined by 11.2% to R3.1 billion, while BCX’s EBITDA was marginally up by 0.6%, from R837 million to R842 million.
Telkom Group yesterday reported subdued performance in the six months ended September, characterised by a weighty drop in earnings, and the group’s revenue remains under pressure.
BCX’s parent company is now seeking to capitalise on the golden age of cyber security, to revive the fortunes of its subsidiary.
According to a recent Accenture report, South Africa is ranked as the third most attacked country in the world in regards to cyber crime, making cyber security solutions and services critical.
Chief information security officers recently expressed huge concerns during the ITWeb Brainstorm CISO Banquet about how third-parties are increasingly exposing businesses to cyber attacks.
Chasing the money
BCX was formed after IT services company Business Connexion was bought out by Telkom in 2015. BCX is the result of the integration of Telkom Business and Business Connexion, founded by Isaac Mophatlane and his late brother Benjamin Mophatlane.
Yesterday, during an interview, Serame Taukobong, Telkom Group CEO, told ITWeb that BCX is exiting low-margin business to focus on “next-generation properties that drive high margins” and chase new opportunities.
To this end, he said: “We are seeking an equity partner – ideally an international one – that will not only bring equity but the skillset that we need. Whilst we are doing that, BCX will also be looking at investment businesses where we see high growth; for example, we have seen significant growth in cyber security, and we are looking at opportunities there, as well as in IT solutions and advisory type of services.
“The cyber security business continues to show growth, as BCX remains focused on assisting clients to respond to the ever-increasing risk of cyber security and building awareness for its security products.”
As it pursues the cyber space, the Telkom unit in 2020 built a Security Operations Centre (SOC) in the vicinity of its Midrand data centre.
The facility was established in partnership with European multinational IT giant Atos, to help South African companies fight cyber crime using quantum computing, big data analytics and automation capabilities from the SOC.
Turning to BCX’s recently forged alliance with Chinese e-commerce and technology infrastructure services company Alibaba Cloud, Taukobong said the deal presented an opportunity that “drives topline growth for BCX and also leverages data centres that bring skills and capabilities, especially around cloud”.
He added that “strategic partnerships are BCX’s strategic pillar for growth” and the Alibaba deal “grants BCX exclusive right and authority to distribute Alibaba Cloud’s products and services in South Africa.
“This is complementary to BCX’s offering as a vendor-agnostic systems integrator that develops solutions for its clients based on their exact use case across a wide range of technology spheres and vertical sectors.”
Fibre business
In the interview, Taukobong also shared near-term plans for another Telkom subsidiary − Openserve, a telecoms infrastructure provider with the biggest fixed broadband network in the country.
In the period under review, Openserve’s revenue declined by 4.3% “despite a pleasing 10.8% growth from next-generation revenue,” Telkom says in its latest results.
It explains this was underpinned by growth in high-capacity links for carriers, an increase in demand for fibre services and growth in enterprise connectivity.
According to Taukobong, in the current reporting period, Openserve continued to evolve its overall revenue mix to next-generation-led products and services, now representing more than 65% of its revenue base.
He said while Openserve saw growth across all its next-generation data-led products, the decline in legacy-based services is still visible. As such, the company will continue to focus on enabling future areas of growth by strengthening customer engagements and building new partnerships.
Going forward, he noted, Openserve will anchor Telkom’s recovery journey, as broadband is at the epicentre of the group’s strategy.
“Openserve is making sure we maintain our leadership in the carrier business. Openserve’s customers are actually the mobile network operators (MNOs) − the likes of Vodacom, MTN and Rain − and we drive connectivity backhaul for those MNOs.
“On the homes passed, we need to make sure we increase the homes connected rate. We are currently sitting at 46.2%, targeting to get to 50%. We have increased the number of homes connected to over 916 000 homes, which I think is about 33% increase.”
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