Telkom acquires new company for R2.6bn

IT IS second time lucky for Telkom (TKG) as the Competition Commission on Thursday approved its R2.6-billion takeover of technology firm Business Connexion (BCX)‚ but with conditions.

The acquisition is intended to advance Telkom’s convergence strategy and help it grow its enterprise operations. A 2007 tie-up was blocked by the competition authorities after strong objections from the industry. This time around it was approved without fuss.

Telkom CEO Sipho Maseko said the acquisition would assist Telkom with its strategy to grow beyond its core business of connectivity by expanding into information and communications technology (ICT) services. “This will enable our business to further enhance and grow its existing offerings‚ while at the same time providing scale in IT services‚” he said.

BCX CEO Isaac Mophatlane said working with Telkom would improve the company’s “customer value proposition through a greater ability to provide integrated ICT solutions”.

The Competition Commission found that Telkom‚ as the largest provider of wholesale-leased lines‚ had the ability to deprive its rivals of access to these leased lines‚ which are essential for the provision of managed network services‚ hosting and other information and technology services. The commission said the merged entity would have the ability and incentives to engage in bundling strategies that may result in anti-competitive effects and in 60 job losses‚ but recommended job cuts be limited to 20-a-year over three years.

The conditions imposed are linked to the agreement Telkom reached with competition authorities two years ago after it was found guilty of anti-competitive behaviour. – Business Day