Who will buy arivia?

By Dave Glazier for arivia.kom
Johannesburg, 09 Nov 2006

Now that Eskom and Transnet have confirmed they will place IT outsourcing company arivia.kom on the open market, debates have begun over who the likely buyer, or buyers, would be.

"Arivia is a hard call," says Mark Walker, International Data Corporation director of business development for IDC Middle East and Africa. "The usual suspects would be Dimension Data, Telkom-BCX, and possibly a couple of the internationals wanting to expand their footprint."

Walker says Choice Technologies, EOH, GijimaAst, Faritec and Datacentrix also come to mind.

"It would likely be someone who is after the Eskom, Denel and Transnet annuity revenue, and who already has some experience and expertise in dealing with state organisations, plus a pile of cash available," he notes.

Parastatal culture

Another market analyst reasons differently: "I'd be surprised if any of the listed companies would be interested," he says, declining to be named. He adds that such a company may be "nervous of what they're buying, from a cultural point of view".

The indications are that - even though Denel shed its interests in the company earlier this year, and Eskom and Transnet are obviously about to do the same - an essentially parastatal type of culture exists, which might not fit with a private sector enterprise, notes the analyst.

"I would expect it to be a private buyer - maybe a BEE consortium or a private equity planner," he predicts.

Strategic alliances

An industry executive, whose company fits the bill as a possible suitor for a stake in arivia, says he would only consider such a move if "firm extensions" to arivia's contracts with Transnet and Eskom were guaranteed.

"I wouldn't be able to hazard a guess at what value the market may place on arivia - one can only assess that if there are term contracts in place, which generate ongoing income and which would have to be examined in terms of a due diligence exercise," he says.

Another possible option could be Neotel. As its competitor, Telkom, seems likely to buy IT services provider Business Connexion, it would make sense for Neotel to match it with an IT services purchase of its own.

Two months ago, arivia and Neotel issued a media statement saying they had "confirmed their intention to collaborate and co-operate on various ICT-related projects as strategic alliance partners".

However, Mickey Mashale, business development executive at arivia.kom, says: "The strategic partnership is a pure operational partnership - it has no implications for the sale [of arivia] and is not linked in any way to the sale."