Government gets off its butt
IT’S GOOD TO SEE Government getting off its proverbial you-know-what in awarding some large-scale information and communication (ICT) tenders. Although there were some delays with regard to the SA Revenue Service tender, it can hardly be accused of resting on its laurels. But it can only be the case that anticipated “Mr Turnaround” at Home Affairs – Mavuso Msimang – had something to do with the awarding of the “Who Am I Online” single citizen-centric application. It went to GijimaAst and a consortium of empowerment investors – after a year-long delay – earlier this month.
GijimaAst’s price rose 8,4% to 103c/share on the news. Other nice awards should prove to be similar share price fillips.
Meanwhile, the result of the highly anticipated Revenue tender award has been what Kaplan Equity Analyst MD Irnest Kaplan describes as a victory for David over Goliath, with Dimension Data pipping Telkom to both the data and voice carrier services towers (Telkom was the reserve bidder in both cases).
“In our opinion, a fantastic win for Didata’s Internet Solutions (IS). What this means is that all phone calls made by Revenue in future will be handled by IS, not Telkom,” Kaplan wrote in a note.
Kaplan has been following the potential for listed IT companies to benefit from Government contracts more closely than most, authoring a well-regarded report specifically on the topic in May.
Didata’s price recently spiked as high as 900c/share. But with IS being relatively small in the context of the overall group, the share didn’t respond specifically to the news, which came ahead of its group results.
Telkom’s share-price movements are currently being determined by the ongoing speculation about its and MTN’s cautionary announcements.
However, news such as the loss of a voice contract can’t be good, particularly against the backdrop of a forecast dip of between 14% and 20% in interim earnings to be reported this week.
The Revenue tender was made up of seven areas – or “towers”. Four of those had previously been announced, the rest more recently. Revenue received 21 bids from 10 separate companies and said it was pleased with the outcome of the process, in particular “the savings it has brought”.
In the case of the first three towers, it had selected bidders to participate in a best and final offer process.
In that process, Business Connexion (BCX) came out trumps over Didata in terms of providing the managed network services tower (Didata was the reserve bidder).
Kaplan says that effectively meant BCX would “control” Revenue’s network and to some extent dictate to the other players, so that was something of a disappointment to Didata, although it was obviously happy with its wins.
BCX shares have trended lower since the acquisition by Telkom got the thumbs down, but were marginally positive on the day Revenue announced that result.
Kaplan estimates the managed network services contract will be worth between R100m and R150m/year to BCX. He estimates the data and voice carrier services towers together will be worth around R250m/year to Didata. Revenue says it will now commence contract negotiations with its preferred bidders.
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