Telkom and BCX get serious

The R9,25 offer was “higher than the all-time high share price of R8,95 prior to the announcement of the potential offer”, says Telkom. BCX shares closed 2,5% higher yesterday at R8,74 apiece.

Telkom said it had approached “five key shareholders of BCX holding in excess of 50% of the entire share capital of BCX”, and that it had received “a combination of written and in-principle support from these shareholders to proceed with the potential offer.”

BCX’s 25% black economic empowerment shareholder Gadlex has signed a heads of agreement with Telkom “regulating its future participation in BCX”, the companies said.

According to BCX’s 2004 annual report, shareholders holding 3% or more are: the Public Investment Corporation (PIC) with 11,32%, Persetel Q Data Africa Holdings with 11,24, the Comparex Holdings Share Purchase Trust with 7,54%, Investec (6,81%), Sanlam (4,17%) and Investment Solutions (4,11%).

Telkom needs 75% of BCX shareholders to vote in favour of the deal if it is to go through.

Globally, fixed-line operators are ex-growth and as such, they are looking for additional revenue streams and ways of getting closer to their clients.

Telkom says the transaction is in line with its ongoing data strategy…. And will “enhance [its] ability to offer its customers end-to-end solutions across the ICT [information, communication and technology] value chain.”

The fixed line operator says that if the offer is successful, “BCX will continue to operate as a standalone or separate business unit within Telkom. BCX will retain and expand its service offering and always service its clients with ongoing commitment.”

According to IT research firm BMI-TechKnowledge, BCX is the biggest player in the South African outsourcing market, with about a third of the market under its belt. Its clients include Sasol, BHP Billiton, Nampak, Sappi and Santam.

The merged entity would be a formidable player in the ICT space; the offer has yet to be approved by competition authorities, and a number of organisations such as the Internet Service Providers Association (Ispa) and the Communication Users Association of SA (Cuasa) have said they will appeal against it going through.

The BCX board has appointed an independent adviser to help it consider the offer and will make a recommendation to BCX shareholders soon, it says.

However, it says “it is not precluded from entertaining any other bona fide offers during the process.” Analysts Moneyweb spoke to were not willing to speculate who potential suitors might be.