Is Telkom becoming a convergent player?

by Trust Matsilele 0

Telkom intends to take-over BCX – a leading IT outsourcing company that integrates innovative business solutions based on information and communications technology, demonstrates the company’s future plans as a convergent player in IT services.

The [DATA BCX:Business Connexion Group Limited] take-over deal has received an overwhelming endorsement from the IT giant’s shareholders.

(READ MORE: S.Africa’s Telkom retreats sharply after two-fold rise this year)

“Increasingly there has been a convergence between telecommunications and IT services as future prospects show that more returns will be in IT locally and globally,” Dobek Pater, telecoms analyst at Africa Analysis said.

Pater said more returns will be in the IT sector in the future which explain [DATA TKG:Telkom SA SOC Limited]’s intention to acquire one of the industry giants.

He added that South Africa’s wireline and wireless telecommunications provider was also facing competition in the sector as more competition was emerging particularly from competition elements like in the fibre and access networks.

He added that, the environment where Telkom wants to head in as part of its future strategy is intensifying in terms of competition so that’s partly the reason why investors are now looking ahead to the implementation of the plan.

(READ MORE: Telkom looks to acquire BCX issued shares)

The company has not paid dividends in three years and is now in talks with the [DATA MTN:MTN Group] over sharing networks, a deal believed will save Telkom cash.

“If you look back at about 18 to 24 months ago when Telkom was at its rock bottom when the stock was about 14 cents per share, you can see that it has increased by 300 per cent,” he said.

However, recent developments of company restructuring has been met with slim losses. Earlier in the week, the company’s stock fell five per cent.

Telkom’s restructuring exercise which will see job losses in the sector is facing huge opposition from labour organisations.