There is a particular corporate anguish reserved for acquisitions that refuse to die; they decline but remain alive.
JSE-listed Telkom purchased BCX for R2.7bn in 2015, believing it was buying a future. Nearly 11 years later, that future remains stubbornly unwritten.
The numbers tell a story similar to a slow puncture: revenue down 9.3% in the third quarter and 5.9% year to date, with converged communications — the legacy heart of the business — losing customers and returning thinner margins.
In his recent analyst engagement, Telkom CEO Serame Taukobong acknowledged the obvious: BCX is suffering exactly the same way as its peers.
Look at the trail of the “walking dead”. Dimension Data, once the jewel of South African ICT, was acquired by NTT and now operates as a “zombie”, a shadow of its former self. EOH spent years amputating limbs to survive. Altron has been spinning off assets.
These are BCX’s true rivals, not in financial metrics but in existential trajectory.
Given this situation, the question posed to Taukobong was brutally honest: what magic does Hasnain Motlekar, a 28-year Telkom veteran appointed acting CEO of BCX, have to buck the trend? The answer was that this is not a one-man job. Rather, it is a “One Telkom” job. Taukobong’s insight lies in his diagnosis of where BCX’s salvation might lie.
The hyperscalers — Microsoft, Amazon, Google — compete directly with system integrators. They no longer need intermediaries to sell cloud services.
As Taukobong noted, they compete “in the same ecosystem”. However, there is an unevenness: the hyperscalers lack connectivity. They do not own the infrastructure. Telkom does.
This is the strategic opening. BCX has been bleeding revenue as it migrates clients from copper to fibre, a necessary but margin-eroding exercise.
Yet there is cause for cautious optimism buried in the reports. Cybersecurity grew 18.4%. IT hardware and software revenue jumped nearly 20%. These are not minor achievements in an environment where corporate clients are containing costs with religious fervour.
The problem is that these growth pockets remain too small to offset structural decline. Taukobong’s language is revealing: “What businesses do we need to get out of?” This is not the rhetoric of turnaround; it is the vocabulary of priorities. BCX must amputate low-margin, declining businesses to save the patient. The only question is whether the patient survives the surgery.
Motlekar’s appointment signals Telkom values institutional memory over external disruption. After 28 years, he knows where the bodies are buried. But does he know how to resurrect them?
His mandate is clear. Jonas Bogoshi, the outgoing CEO, laid “the foundation for the next phase of BCX’s strategic review” — corporate speak for “we figured out what’s broken, now someone else must fix it”.
Motlekar must accelerate transformation initiatives that have failed to stem the revenue bleed. If Taukobong’s diagnosis is correct, the cure is simple in concept and difficult in execution.
First, Telkom must treat BCX not as a standalone business but as the services layer atop its infrastructure asset. Every fibre connection sold by Openserve must trigger a BCX sales call. Every copper decommissioning must generate a service opportunity. This is not happening at any significant scale today.
Second, BCX must accept its traditional systems integration model is terminal. Dimension Data, EOH and Altron are all retreating from this terrain. The survivors will specialise in adjacencies that hyperscalers cannot easily replicate: complex on-premise integrations, regulatory compliance and sector-specific security.
Third, Taukobong must resist the temptation to sell. Telkom has considered “a partial or complete sell-off” of BCX, but this would be a strategic error.
The infrastructure-plus-services model works only if the services arm remains captive. Selling BCX would be like pawning the engine because the wheels are flat.
BCX is not beyond saving. But saving it requires Telkom to execute cross-business unit co-ordination with precision. Motlekar, now at the helm of BCX, understands the organisation’s wiring.
That is valuable. But understanding why something is broken is not the same as fixing it. Motlekar’s tenure will be judged not by strategies devised but by revenue earned.
• Lourie is founder and editor of TechFinancials.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.