Jasco and Neotel join forces
Jasco Group has combined forces with Neotel to gain significant market share within the telecommunications space.
With the recent acquisition of Spescom and its new found relationship, Jasco says it has gained more bulk within the ICT sphere and sees it relying a lot less on fixed line incumbent, Telkom for business.
“We are going to diversify this business. In the past a lot of our businesses – when Telkom sneezed, we got double pneumonia. I cannot have that in future any more. So we are going to diversify within the ICT and that is the Spescom acquisition,” said recently appointed CEO Pete da Silva.
The company plans to grow its market share of 5% to double digits over the next two to five years, by operating aggressively and diversifying its services within this space.
Da Silva announced that the company has changed its group structure, into Jasco ICT solutions, Industry Solutions and Energy Solutions, but maintains that ICT will be a key focus area for the group.
Pete da Silva
“It’s our core business, even though we are quite proud of the volumes we are producing, we know that we must grow that market share, even though it’s a mature business. We are excited and there’s lots of cake to eat there and we intend to do that, we intend to grow our market share,” said Da Silva.
The move is not a surprising considering Jasco’s annual results which were released on Tuesday. Revenue from its telecoms operations grew by 51%, attributed to the performance of DataFusion this past year. Overall the company’s revenue from its ICT solutions contributed R550m to group revenue.
With the digital migration deadline fast approaching, Jasco says it will place a “special focus on broadcast solutions to assist in the migration”, however the company remained mum on how this would work.
With regards to the restructuring, Da Silva highlighted the importance of all its subsidiaries associated with the Jasco brand. The three verticals – namely, information and communications technology (ICT) solutions, industry solutions and energy solutions, also have some new requirements in place with regard to their financial performance.
Each vertical must generate a minimum revenue output of R350m per annum, meanwhile the business units within the verticals must deliver a sustainable business volume of R150m in revenue per annum, said Da Silva.
Da Silva says that these measure need to be put in place to ensure that new acquisitions are well managed.
“Some of our past acquisitions have made R50m ,R80m, R110m, but they just don’t have critical mass, but they still have an MD an FD and the super structure under there that is draining cost. Now we have taken that away.”
Da Silva says if their subsidiaries are hoping to maintain these positions within them, they must meet the minimum requirements or “otherwise risk being located with another company within the group, which will help in reducing cost structures”.
Despite reporting a 12% decline in diluted headline earnings per share to 14c for the year ended June 2011 a final dividend of 2.5cper share was however declared.
Reported group operating profit declined by 11% to R28.8m, with like-for-like operating profit increasing by 42% to R42.3m mainly due to the domestic products division’s sound performance in the second half of the year.
Source: Moneyweb
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