An inflection point?
FROM BEING WORTH a potential 925c/share as a buyout target to Telkom (although the price only rose as high as 810c), Business Connexion's (BCX) price dwindled to 525c/share towards end-November, nearly six months after the Competition Tribunal said no.
Two nice Government wins later and fortunes might now have turned. They were the managed network services tower of the SA Revenue Service tender, plus the R100m contract awarded for the SA National Research Network.
The big test will be interims to November, which BCX will report early next year.
The company's CEO Benjamin Mophatlane, who took over from Peter Watt in July, faces the task of rebuilding the performance after the 13% decline in headline earnings per share in the year to May.
It will be coming off a low base but it has a lot of work to do to rebuild operating margins back to the 6,6% they reached in 2005 (they dropped to 3,1% over the past year). Key will be better performances from its core services and worst hit communications divisions.
An aside is that BCX could roll the empowerment partners from operating to listed company level and bring in additional partners.
OPPORTUNITIES
* Further Government tender opportunities
* A potential takeover target by Bytes, particularly with the muscle of Altron behind it. However, Bytes' CEO David Redshaw never thought BCX was worth as much as Telkom did.
RISKS
* Continued margin pressure.
* Can communications division be fixed?
Finweek
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