There have been dramatic changes in SA's information and communications technology (ICT) sector in the past year. Not only has the traditional IT component of the converged industry begun to recover after years of recession, but companies in the sector also concluded some of the more notable black economic empowerment (BEE) transactions of the year.
Fixed-line carrier Telkom again takes top honours in this year's survey. It also comes out on top overall for the second year.
Pretoria-based Datacentrix is again SA's top empowered IT company, and comes in second, after Telkom, in the ICT sector ranking. PC maker Mustek is third, which is impressive, considering it did not make the top 20 last year. Paracon is fourth (previously ninth) and Dimension Data (Didata) came fifth from its previous eighth position.
MTN (which has fallen sharply from second to fifth), Bytes Technology Group (up from 18th to sixth), Business Connexion (sixth to eighth), CS Holdings (which has been acquired by Bytes) fourth to ninth, and Prism (seventh to 10th) round out the top 10.
Datacentrix, which listed on the JSE Securities Exchange in 1998, is consistently rated as one of SA's most empowered companies, and in 2003 it was named by Empowerdex as the most empowered company listed on the JSE. But this was only after the company began actively marketing its BEE credentials. Executive chairman Gary Morolo says that previously there had been a perception in the market that the company was not empowered.
Datacentrix was one of the first listed companies to sell equity in its business to a black partner. In 1997, MD Gerhard Uys, as well as sales and marketing director Klaas Lammers, sold 51% of the business to black-owned Co-ordinated Network Investments (now AKA Capital).
The size of the company - at the time of the transaction it had only 60 employees - made transformation far easier than it will be for SA's larger IT groups, Morolo says.
SA's two biggest IT companies - Business Connexion (formerly Comparex) and Didata - both concluded equity deals with black partners in 2004.
The former involved the merger of Comparex, a traditionally Afrikaner-led IT company, with young Pretoria firm Business Connexion, founded by the Mophatlane twins, Benjamin and Isaac.
The latter deal, involving former communications department director-general Andile Ngcaba, was much more controversial. In September, Ngcaba, together with broad-based empowerment groups and black-owned investment company Safika, acquired 25,01% of Didata in a vendor-financed deal valued at R380m. Ngcaba will hold 9,81% of the business, Safika will own 5% and broad-based empowerment groups will hold a further 10,2%.
About 3% of the broad-based shareholding will be used for developmental initiatives, while 7,23% will be allocated to existing and future black Didata employees (4,65%) and to business partners (2,58%).
Within three months of concluding the Didata deal, and contrary to earlier denials, Ngcaba announced he was leading a consortium that hoped to purchase the remaining 15,1% equity stake held by Thintana (SBC Communications and Telekom Malaysia) in Telkom.
ANC spokesman Smuts Ngonyama was advising the Ngcaba consortium, which also included Wiphold.
The proposed deal unleashed a political storm. Both the DA and Cosatu slammed the proposed deal. It provoked allegations of crony capitalism, poor corporate governance and conflicts of interest. Ngonyama came in for particularly harsh criticism for his involvement and his close ties to the ANC and to the presidency.
The Public Investment Commissioners subsequently bought the Thintana shares in a deal worth R6,6bn. These have been warehoused for six months while Ngcaba's consortium devises a suitable funding arrangement to purchase them. The controversy surrounding this deal is likely to continue well into 2005.
