End-to-end IT services provider EOH has agreed to sell Hymax and its stake in Network Solutions to Seacom for R144.9m to reduce debt and turn the company around after a corruption scandal.
Network Solutions and software company Hymax both offer networking and voice solutions in the telecoms industry. Seacom owns and operates a broadband submarine cable system that links Africa to Europe and Asia.
EOH is fighting to regain credibility after revelations of a corruption scandal, prompting it to hire former MTN executive Stephen van Coller in late 2018 to spearhead a recovery.
Van Coller appointed law firm ENSafrica to investigate allegations of fraud and corruption. The investigation found underhand dealings with its government client, including transactions valued at more than R600m with no evidence of valid contracts being in place or for which no work was done.
The sale will ensure Network Solutions and Hymax can “continue investing in world-class infrastructure and maintain their service excellence”, EOH said on Thursday.
The sale is subject to the approval of Seacom and EOH’s board and shareholders, and unconditional approval from competition authorities.
EOH said on March 31 that it expects headline earnings per share to rise between 206% and 222% in the six months to end-January, from a loss of 36c previously. Operating profit is expected to rise to R180m-R150m, from R76m previously.
The company, which generates about 90% of its revenue in SA, and also has operations in North Africa, the Middle East and Europe, is restructuring in a bid to cut debt and is disposing of noncore assets and closing out unprofitable contracts.
In March, it concluded the sale of software company Sybrin for R334m and announced plans to sell data analytics and risk mitigation business Information Services.
Update: April 7 2022
This article has been updated to highlight scandals that EOH has been dealing with.
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