JSE-listed technology group iOCO has signalled a shift from survival mode to growth, announcing its first acquisition since completing a multiyear turnaround plan that has transformed the former EOH into a leaner, more profitable business.
The company said on Wednesday that it had entered into a binding agreement to acquire 100% of the MySky Group of Companies, a South African enterprise networking and managed infrastructure services provider, for R47-million in cash. The deal also includes R5-million payable in iOCO shares subject to vesting conditions over three years, along with a contingent element tied to MySky’s future performance over two years.
MySky is expected to contribute about R80-million in annual revenue and R10-million in profit after tax in its first full year under iOCO’s ownership. The acquisition is expected to close within three months.
The deal, disclosed as a post-period event in iOCO’s interim results for the six months ended 31 January 2026, is designed to strengthen the group’s networking capability, expand its enterprise client base and provide scalable recurring revenue growth.
It also marks a symbolic turning point. iOCO’s three-step turnaround strategy — comprising cost rationalisation, decentralisation and capital allocation — is now substantially complete, and the MySky transaction is the first tangible sign of the company pivoting to acquisitive growth.
Turnaround gains traction
The interim results themselves underscore the progress. Group revenue rose 3.5% to R2.8-billion, which iOCO said represented its first period of organic revenue growth in several years. More striking was the improvement in profitability: headline earnings per share climbed 47.4% to 28c, profit after tax rose 45.6% to R180-million and Ebitda — a measure of operational profitability — grew 20.8% to R305-million.
Operating expenses fell 9.2% and net finance costs declined 34.5%, reflecting the benefits of cost discipline and debt reduction. Net asset value increased 19.8% to R903-million.
Read: Dennis Venter resigns as iOCO co-CEO
Group CEO Rhys Summerton and chief financial officer Ashona Kooblall said the results reflected stronger operational discipline, focused execution and increasing commercial traction. The company said it had also seen market share growth for the first time in several years.
The revenue growth came at a cost, however. Gross margins compressed from 30.1% to 27.8% as iOCO competed more aggressively on pricing to win and retain customers. The company framed this as a deliberate strategic trade-off, arguing that it strengthens its long-term revenue base.
Despite the lower gross margins, operating and Ebitda margins expanded to 9% and 11% respectively, up from 8% and 9% in the prior period, as cost rationalisation more than offset the pricing pressure.
IT services, iOCO’s largest division with R2.1-billion in external revenue, grew the top line by 3.3% but saw a 7% decline in Ebitda. The company attributed this to delayed project starts, hardware supply constraints, and margin pressure in its people businesses and software development operations. Extended sales cycles, particularly in the public sector, remain a challenge, though iOCO said new public sector opportunities were promising.
Operational technology was a standout, delivering 15% Ebitda growth on gross margins above 34%. The segment, which focuses on industrial technology solutions including infrastructure, energy systems and connectivity, benefited from operational efficiencies and strong pipeline activity.
The international division reported revenue growth driven by increased customer activity in cloud services and platform-related offerings. Profitability was constrained in the UK following the loss of a major high-margin customer, but this was offset by growth in the Middle East and Switzerland.
iOCO flagged geographic expansion — specifically into the Middle East — as a key growth priority. The commentary described it as “an exciting time for iOCO as we drive market expansion across various regions, specifically the Middle East”. The company said the diversification demonstrated the resilience of its international portfolio and contributed to market share gains during the first half.
Stronger balance sheet
The group’s balance sheet continued to strengthen during the period. Net interest-bearing debt fell to R512-million after iOCO repaid R58-million in capital and interest from cash generated by operations. The company ended the half with no overdraft and reduced interest payments on bank debt to R27-million, down from R39-million in the prior period.
iOCO had R379-million in cash at the end of the reporting period, excluding an undrawn R250-million overdraft facility.
As part of its capital allocation strategy, the group repurchased nearly 6.5 million shares during the period for R27-million, representing approximately 1% of its issued share capital. Shares were bought back at prices ranging from R3.95 to R4.65 each. The buyback programme commenced on 1 August 2025 following shareholder approval.
iOCO said it would focus in the second half on deepening its revenue base and capitalising on market share growth. Key focus areas include managed services, operational technology, digital transformation, cloud solutions, cybersecurity advisory and infrastructure solutions.
The company said it was also actively exploring a targeted pipeline of acquisitions to strengthen capabilities, expand market share and accelerate growth. — (c) 2026 NewsCentral Media
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