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BCX’s first-quarter performance tells the story of an IT business that is bleeding financially and in need of stability.
Now, more than 100 days in the role, acting CEO Hasnain Motlekar says this is his priority for the IT services business.
The business showed a number of bright spots in the three months to end-June, like IT services revenue being marginally up 0.3% in a constrained IT sector, with cybersecurity growing 36.6% and cloud services up 11.8%.
It said the stable IT services revenue “is commendable considering that the IT sector remained constrained, a testament of the focus on customer retention and a reflection of shifting the portfolio towards scalable, higher-margin, and annuity-oriented offerings.”
However, this was not enough to make up for a 10.9% year-on-year drop in total revenue to R2.594bn, from R2.910bn previously. In this, the largest drops came from IT hardware and software, with revenue down 30.1% in the period to R424m, while converged communications was down 11.1% to R1.084bn.
The group said enterprise performance continued to be impacted by clients “favouring cost-efficiency measures, instead of transformation initiatives. The continued structured operating cadence has strengthened oversight of performance, pipeline quality and deal execution”.
Even then, the unit was able to grow earnings before interest, tax, depreciation and amortisation (ebitda) by 2.6% to R194m for the quarter.
Telkom Group CEO Serame Taukobong warned the turnaround in BCX would take time.
“BCX turnaround requires time, and the new leadership has commenced with repositioning and reassessing the IT product portfolio to ensure that focus remains on scalable high-margin offerings. Priorities include completing modernisation initiatives and enhancing cloud, data, and AI capabilities to support customer digital transformation requirements,” he said.
Motlekar’s focus is on stability and ensuring that BCX has the right mix of offerings.
“Stability and portfolio adjudication. That’s probably the focus for the next 6-12 months. So that we can stop the bleed,” he said in an interview.
“We’ve had a low double-digit to high single-digit decline over the last 10 years. Even if we just get low single-digit or flat revenue growth, it’s a big win for this year. That’s the ambition.”
In assessing the portfolio, the key is to align BCX to Telkom’s broader strategy, with the unit having run as a separate silo for a number of years.
“We must be careful not to build what we did previously, [because] this thing was operating independently. It has to now operate within the house of Telkom,” said Motlekar.
The Centurion-based company has evolved to now offer advisory services to its clients as part of the retention effort.
“Where the customers are asking for a path [to growth], and solutions from the product team, we’ve created an internal consulting house, that allows us to engage with the customer and have conversations without [necessarily] selling to the customer.”
Business Day
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