Recent earnings results for local players in the IT space indicate that firms are targeting African expansion amid a lack of real growth in South Africa.<\/p>\n
On Thursday (April 19, 2012) ICT group, Business Connexion (BCX)<\/a> reported a 43.5% rise in revenue for the six months ended February 2012 to R2.69 billion, while operating profit increased from R40.2 million to R130.8 million.<\/p>\n However, business research and consulting firm, Frost & Sullivan<\/a> noted continued challenging operating conditions in some of its divisions in SA.<\/p>\n Information and communication technologies research analyst at F&S, Mervin Miemoukanda questions whether BCX is likely to achieve its forecasted profit margin of 8% for the full year, due to a lack of closing existing and new large outsourcing deals in the public and corporate sectors.<\/p>\n \u201cIn South Africa, BCX Group\u2019s overall revenues are expected to remain under pressure, as turnaround time for tenders in the public sector becomes much longer,\u201d Miemoukanda said.<\/p>\n He added that the Treasury has, in fact, been conducting tender audits in the public sector, thus having a detrimental impact on the company\u2019s revenues – particularly in the technology division one.<\/p>\n BCX underlined a 28.7% decline in revenue in its technology division to R429 million.<\/p>\n Frost & Sullivan said it believed that the company\u2019s international operations would become a key revenue contributor in the medium to long term, as the company moved its traditional outsourcing business towards cloud services in its flagship market, SA.<\/p>\n Indeed BCX CEO, Benjamin Mophatlane<\/a> said that the company will be investing into further acquisition targets into Africa, in order to increase its growth into the region.<\/p>\n Business Connexion boasts operations in Ghana, Nigeria, Tanzania, Namibia, Mozambique, Kenya and Zambia.<\/p>\n \u201cThe pipeline in Africa is healthy, it\u2019s the first time that the international operation has made a profit,\u201d Mophatlane said. He highlighted a significant $20 million public sector deal in Ghana, adding that the group had also started to win business in Nigeria, \u201ca key market\u201d.<\/p>\n The company lead described Mozambique as the “best kept secret in Sub-Saharan Africa” with Business Connexion having resigned a contract with mining giant, Rio Tinto there.<\/p>\n Mophatlane said that the ICT group would continue to invest in Kenya, with a number of “significant” deals expected soon. \u201cThe international division is in the best health it\u2019s been for a very long time,\u201d Mophatlane said.<\/p>\n Similarly, information risk management (IRM) group, SecureData Holdings (SDH)<\/a>, also on Thursday (19 April 2012), reported a decline in operating profit to R6.109 million for the six months ended January 2012, from R9.093 million before.<\/p>\n \u201cOverall, the group did not deliver on expectation. The board made a decision to turn all its focus and attention on its African operations,\u201d the group said in a statement.<\/p>\n Kenya IT ambition<\/strong><\/p>\n Kenya is serious about technology. The country has set a goal to become the information and communication technology (ICT) and business process outsourcing (BPO) hub of choice for Africa by 2030, and ensures a relatively transparent regulatory environment.<\/p>\n Kenyan telecoms operator, Safaricom<\/a> announced earlier this week that it will lay a fibre-optic cable network in expectation of a mobile “data tsunami”.<\/p>\n The group\u2019s CEO told Reuters that it also sees Kenya positioned as a possible information technology hub for the entire continent.<\/p>\n Safaricom expects a surge in demand for data services in the east African nation of 40 million people, thanks to an explosion of Internet-ready hand-held devices, an increase in the number of relevant applications and content.<\/p>\n Related articles<\/strong><\/p>\n Business Connexion jumps on earnings forecast<\/a><\/strong><\/p>\n Business Connexion to target African growth<\/a><\/strong><\/p>\n