Telkom firm holds back on stake sale

Telkom subsidiary BCX has shelved its plan to sell its stake in software company NGA, as it sees the business adding value to overall offerings.

BCX also announced the appointment of industry veteran Jonas Bogoshi as CEO to replace Ian Russell.

Commenting on NGA, Telkom said: “We have re-evaluated the NGA business, which focuses on HR software and processing, and believe that we can meaningfully integrate this with other core software solutions which BCX offers to its customers.”

Instead of divesting it, NGA’s local business will become a wholly owned subsidiary of the group. “We believe we can move swiftly to integrate this with the core BCX solutions as soon as all approvals are in place,” Telkom said.

The Competition Commission said on Wednesday it had approved the transaction without conditions.

Telkom, which is majority owned by the government, said in May that it was looking for acquisitions.

“We may need a couple of things on the fibre side or in the cybersecurity side. We think that will be very important in the future,” CEO Sipho Maseko told Business Day last week.

“We’re also looking at things like industrial IoT [internet of things] and at applications, at platforms now, rather than hardcore industrial-age kinds of businesses.”

JPMorgan said in a report last week that Telkom offered “the most compelling risk-reward trade-off in SA telecoms”.

The US bank’s price target for Telkom is R70 a share. The stock was at R51.79 on Friday.

The target “reflects topline and earnings expansion in financial year 2019”, driven by the mobile business.

Commenting on Bogoshi’s appointment, Maseko said Bogoshi “will continue to implement in line with Telkom’s growth plan for BCX”.