Itec buys controlling stake in Songimali

Asha Speckman

FURTHER consolidation of the highly competitive local telecoms market will be a dominant feature this year, according to Ryan Miles, the chief operating office at Itec, which announced yesterday its acquisition of a controlling stake in Songimali Communications.

The acquisition of a 51 percent stake will see Itec, an unlisted office automation group, become a fully-fledged telecoms provider and a tier-one player.

Itec has a footprint across southern Africa but predominantly in South Africa.

Songimali owner and managing director Rolf Schurink will stay on in an executive role.

Miles said smaller firms competing for mid-tier clients would find it increasingly “challenging to compete in the high end” without their own infrastructure and many would partner with companies with the necessary infrastructure.

Songimali, a Zulu term for “saving money”, is a licensed telecoms provider.

Miles said the value of the deal was confidential, adding that the group aimed to provide converged voice, data and video solutions and would expand its client focus from small businesses to larger clients in the public and private sectors.

“We’ve certainly noticed a lot more take up of these services,” he said, adding that some drivers of the interest in voice, data and video included companies looking to save costs, the reduced cost of bandwidth and the effects of globalisation, with many South African companies becoming multinational and interacting with their operations on other continents.

Miles said Itec was considering expansion of its satellite services, which had traditionally served as a connectivity back-up for business clients.

The International Data Corporation’s programme manager for telecoms in Africa, Spiwe Chireka, said last month in a presentation on the top 10 telecoms trends for the year that market consolidation would become significant as resources became scarce and customer growth shrank.

She said satellite connectivity would gain popularity as fibre-optic network roll-outs were “slow and sometimes economically unfeasible”. Satellite connectivity was also regarded as more reliable and faster than mobile connectivity.

She said satellite was the preferred technology to ensure consistency for multinationals.

Miles said investment would also be made to “mobilise” the 47 touch points in Itec’s national footprint by investing in training personnel.

Itec has 18 000 clients and will add 470 Songimali customers to its database.

“We are targeting to grow our clients by 200 percent in the first year, which will give us a reasonable market share,” Miles said. “An increasingly sophisticated market and a demanding customer base are the reasons we are seeing a move away from niche players and towards general service provisioning.”

He said the trend was to provide a “one-stop shop” and to own infrastructure rather than reselling another company’s products and services.

“It’s about aggregating services to stay competitive through size and scale,” he said.