Listed technology firm TeleMasters is looking to acquire businesses in an effort to beef up its technology holdings, having recently acquired two companies for a combined R16.5m.
The group operates in the telecoms sector and specialises in custom telecoms solutions for businesses. The primary segments it serves are voice service providers, cloud PBX service providers and internet service providers.
“We have an acquisitive mindset,” said CEO Jaco Voigt.
With a market capitalisation of R42.4m, Voigt said TeleMasters has R16m in cash reserves and access to additional funding for buying businesses.
Telemasters’ revenue for the six months to December 2019 fell to R42.3m from R53.6m in the previous comparable period.
As part of its expansion drive, TeleMasters last week said it had acquired cloud communications company Contineo for R15.15m and Perfectworx, a network systems integrator, for R1.35m.
These are both businesses that had been started and run by Voigt, who assumed leadership at TeleMasters in 2018. As such, the company disclosed to shareholders that this was a related party transaction for what it describes as “two separate, but indivisible agreements”.
Voigt is a director of and 50% shareholder in Contineo and a director in and the sole shareholder of Perfectworx.
“If the opportunity does present itself, we will not shy away from it,” he said, explaining that TeleMasters is constantly looking for deals and that there are more announcements to come in the near future.
The former Vox CEO said TeleMasters was in the market for “anything in the technology industry”, but it was especially interested in internet service providers and cloud computing businesses.
Contineo provides a virtual unified communications platform that enables businesses to manage and share information of all types between mobile employees, virtual teams and dispersed customers.
Perfectworx specialises in next-generation IP (internet protocol) voice technologies that allow users to increase the value, efficiency and performance of their voice network operations.
As at December 2019, the two companies had combined net assets of R5.89m and profit after tax of R1.86m.
To help TeleMasters achieve its goals, Voigt said a number of board members have experience with M&A.
In competing with firms like Dimension Data’s Internet Solutions and Vox, Voigt said the company plans to keep its various brands separate. This is unlike other technology players like Altron and EOH that have been working to consolidate their business units.
TeleMasters had previously indicated that in the coming year it will focus on identifying and acquiring complementary businesses to make it more competitive and improve its profitability.
“As part of our new direction, we are also placing renewed focus on our marketing strategy. As a first step, we successfully rebranded our principal operating subsidiary as Catalytic Connections,” the company said in a statement.
While the full effect of Covid-19 cannot yet be determined, TeleMasters’ board of directors believes “the group has sufficient resources to continue as a going concern for the immediate future”.
A generally volatile stock, TeleMasters’ share price is up 44% for the year. Shares in the company rose 38.36% on Friday to R1.01.
Voigt said the company doesn’t concern itself with market movements. “We leave the share price to the clever people.”
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