Converged telecoms provider Telkom has offered to buy one of Africa’s largest information and communications technology (ICT) service firms Business Connexion (BCX) for R2.7 billion.

BCX primarily describes itself as a cloud based services provider with offices in Africa, the
UK and Dubai. BCX says it employs more than 6,700 people in Africa, and generates revenue in excess of R6 billion per annum.

Telkom; meanwhile, offers voice and data services across fixed and mobile lines in South Africa. The company says it has approximately 3.7 million telephone access lines in service, and 183,880 ports connected via multi-service access node access.

Both companies are listed on the Johannesburg Stock Exchange (JSE), meaning that if the deal is successful Telkom intends terminating the listing of the BCX ordinary shares.

A public announcement by the two companies on the JSE’s Securities Exchange News Service (SENS) details how Telkom intends to make a cash offer to acquire the entire issued share capital of BCX at a premium price of R6,60 per share.

“A key consideration of our strategy is to grow beyond our core business of connectivity and expand into end-to-end ICT services.This will form part of the strategy to improve performance and restore profitability,” said Telkom Group chief executive officer, Sipho Maseko, in a press statement.

More detailed rationale for the proposed transaction is listed by the companies’ joint statement on SENS.

“The proposed transaction will address the technology and telecommunications needs
of South African companies, both within their domestic markets and as they expand
into other African countries and beyond the continent,” reads the SENS announcement.

The announcement goes on further to say that “as major global technological changes are driving convergence of the information technology and telecommunications industries, the proposed transaction will advance the convergence strategies of both Telkom and BCX.”

Telkom says ITS offer is “fully-funded” and that a full detailed due diligence has been undertaken and completed.

Telkom has gone to call on BCX shareholders “to dispose of their shares at a premium to the recent historical traded market price of the shares” as “the offer is in the best interests of BCX, its stakeholders and the long-term telecommunications interests of South Africa and the African continent.”