Secure Connexion
A major software overhaul to instal SAP’s enterprise resource planning software took up more time and money than expected, as SAP projects are wont to do. The work had been put off for at least three years, Watt says, but could not be delayed any longer.
At the same time the company completed two data centres costing R150m, which are hosting the software applications and data generated by some of its major customers. Its investment in bigger and better data centre facilities was timely, as more companies opt to outsource their technology services to a specialist third party.
It was also great timing to conduct those two major expenses while Telkom’s proposed take over of Business Connexion was firming up. It actually doesn’t matter that it has posted poor results, as the terms of the acquisition give Telkom no leeway to lower its bid price or walk away.
That means shareholders are guaranteed R9,25 a share if the Competition Tribunal approves the deal. So it was wise to do the work that needed doing now — even if the resulting figures disappoint its investors — since the value of their shares will not diminish unless the tribunal vetoes the deal.
That, of course, is a very real possibility, so Business Connexion is making sure its building blocks are all in place. With such major expenses now behind it, better results should be generated for its future, whether that involves Telkom or not.
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