In a move to beef up its networking portfolio and cloud offering, technology group Datatec has acquired Siticom, a Germany company that provides 5G infrastructure.
As 5G, the fifth generation of mobile technology, has begun to take off worldwide, technology firms are increasingly looking to have their own infrastructure in place to help client systems and data centres communicate as quickly as possible, driven by the growth in cloud computing.
Seen as the next frontier of telecommunications technology, 5G is said to be 100 times faster than 4G. A 2GB movie file that takes 160 seconds to download on 4G takes less than two seconds to complete on 5G.
The acquisition of Siticom will be done through Datatec’s subsidiary Logicalis, an information and communications technology (ICT) infrastructure services unit.
Datatec said Siticom’s expertise in next-generation networks “enhances Logicalis’ services portfolio as it continues to grow in the professional and managed services space”.
The acquisition will also allow Logicalis to create a hub for network integration for its European operations. Over time, the group says, it aims to expand these skill sets and application knowledge across its operations in markets such as Latin America and Asia.
“This is a bet that connectivity is going to be what drives the digital age,” Datatec CEO Jens Montanana told Business Day.
Datatec did not disclose how much the deal was for. Montanana said the transaction was “in excess of $20m (R272m)”.
Established in 2010, Siticom designs, implements and manages communications networks and campus network solutions for enterprises in Germany, Austria and Switzerland. The company has annual revenues of about $25m, with clients in telecoms, pharmaceuticals and financial services, among others, including Deutsche Telecom and Thompson Reuters.
Datatec, whose operations span more than 50 countries, has two main divisions: Logicalis and Westcon International (WI), which distributes security and networking technology products.
Having found a handful of potential acquisition targets in Norway, Sweden and Germany, the transaction makes sense as they had observed “the need for optical [or fibre] network and 5G expertise accelerating across our operations as public and private networks undergo a sustained period of heightened demand”, Montanana said.
In a world of cloud computing and automating of processes such as manufacturing, ICT players see 5G technology as an important asset.
“With the ICT landscape being increasingly driven by edge computing using many forms of wireless technology and the applications world moving increasingly to cloud-based infrastructure, tomorrow’s integrators will need to be able to knit these environments together and we believe the Siticom acquisition will give us a head start in the development of this knowledge,” Montanana said.
Edge computing refers to the practice of capturing, storing, processing and analysing data near a client where the data is generated, instead of in a centralised data centre. Fast communication between these systems is key.
“The predecessors to 5G were purely for network operators, but 5G is going to be different. 5G is going to be for private businesses, organisations with large offices or campuses like shopping malls, universities, sporting facilities and factories,” said the Datatec head.
Though it is likely to be a small acquisition, Peter Takaendesa, head of equities at Mergence Investment Managers, said the transaction could help to grow the group’s business over time but how that is implemented is important.
“[This] must be very small for now and hence the voluntary disclosure. It has potential longer term if they can execute well and expand the service to other regions.”
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