The 24th of August 2015 marked an historic day in the history of Business Connexion as the company delisted from the JSE following the successful acquisition by Telkom and after trading for more than 11 years as an independent listed company.
The journey for my 23-year-old twin brother Benjamin and I began with our vision to start an IT company, coupled with our ambitious drive to make it succeed.
Ben and I discovered computers at the age of 12 and were immediately fascinated. We had tremendous support from our parents who were always very clear about education opening the door to success, so we worked hard and finished high school with high enough marks to secure bursaries from South African Breweries to study accounting.
We were lucky in this regard. Our generation was the last to really experience apartheid, but we knew that the only way we would make it in business was through education, so we embraced that.
We witnessed the dawn of the IT era. We both got part-time sales jobs with a company called Software Connection, which gave us the opportunity to further develop our passion for technology. Back then, Windows 95 was considered cool, with one million copies sold within four days. Microsoft’s Office 97 was made available in December 1996 on either CD-ROM or on a set of 45 3,5-inch floppy discs. Google launched the same year, but very few people outside of Stanford knew about Google. For us these were exciting times.
The work we did part-time while studying laid the foundation for what was to come. We had access to a number of highly qualified and talented individuals and managed to develop great relationships that would serve us well in the future. There are very few entrepreneurs that get access to funding for their ideas, but it was different for us. By the time we were ready to start our own IT reseller company in 1996, we had been working part-time at Software Connection’s Pretoria branch for 18 months. We had proven ourselves through hard work and dedication, and when we approached the owners of the chain, Connection Group, they were willing to take a chance on us. It was at a time when procurement policies were changing and it was the perfect time for two young black men to stake their claim in an industry about to boom.
At the tender age of 23, we were far too young to be afraid of taking risks and this was probably our saving grace. We were confident in our abilities and had established a great relationship with a company that was built on entrepreneurial spirit and allowing us to focus on gearing the business up for growth. That doesn’t mean that it was easy, though. Having the cash did not make it any easier — even leasing office space was a headache as no one believed that we had the money. What we did have, though, was a large network as a result of the work we did with Software Connection and that helped us to secure our first clients. Our focus was on customer service and this remains a core value for us today in Business Connexion.
While Business Connection, as it was called then, earned revenues of R100 000 in the first year, my brother and I had no intention of staying small. We moved away from being a reseller to becoming a software integrator. By 1997, we started focusing on becoming a specialist Microsoft-certified solution provider and one of a small number of local Microsoft large account resellers. The relationship with Microsoft proved to be a fruitful one and resulted in a big turning point for the company — a three-year, R100m contract from Telkom to supply their entire user base with Microsoft licences.
This deal suddenly put us in a new league. We had to employ additional, experienced staff and had to do so quickly. The deal was a great success and look where we are today.
The first merger took place in 1999 with Dutch-based Getronix, and then joining forces with Seattle Solutions in 2001.
In our pursuit of growth and sustainability, we realised the need to diversify. We dominated the Microsoft market at that stage and knew that in order to remain sustainable and relevant we would need to move into other areas. In 2004, we merged with Comparex Africa, creating a black-empowered ICT giant with annual revenues in excess of R3bn. The new Business Connexion was born and listed in April that year. It was three years later, in 2007, that Telkom first tried to acquire the company, a bid that proved unsuccessful.
In 2007, Benjamin became the CEO of Business Connexion Group and on the foundation of a corporate restructure started an exciting period of organic and acquisitive growth for the company. Large acquisitions included UCS, the listed retail focused ICT solution provider, Canoa, a leading provider of Canon’s print solutions, and Integr8, a focused mid-tier ICT systems integrator. During this period, the business grew revenues to over R7bn with almost 7 000 employees in offices in Africa, the Middle East and the UK.
As part of Business Connexion Group’s broad-based black economic empowerment strategy, the first BBBEE deal with Gadlex Holdings was concluded in 2003.
In the true spirit of BBBEE, a further 10 developmental organisations were included in the Business Connexion “A” share transaction concluded in 2008. These organisations included Ditikeni Investment Company, League of Friends of the Blind, Sakhikamva Investments, Business Connexion Education Association, Cape Flats Development Association, Combined Churches in Action, CIE Investment Company, Community Outreach Programme Trust, Freewheel Trade and Invest 36 and YWCA Dube Charitable Trust.
This deal also included Gadlex Holdings and key Business Connexion leadership. The successful conclusion of the acquisition of Business Connexion by Telkom on 24 August 2015, unlocked value of R72,7m, which was distributed to all parties to this deal.
2015 now sees the successful conclusion of two truly South African companies coming together. This not only heralds a new beginning for Business Connexion, but also for Telkom.
The convergence between IT and telecommunications is a global phenomenon which cannot be avoided. This deal is in line with this and will bear benefits for both Telkom and Business Connexion. We will continue to exist as an independent subsidiary of Telkom, but by working together we will improve our customer value proposition through a greater ability to provide integrated end-to-end ICT solutions and a more global and competitive offering, particularly on the African continent and beyond.
It has been an emotional ride and Benjamin, who passed away tragically just over a year ago, was hugely instrumental in ensuring that this deal succeeded. The conclusion of the deal with Telkom is testimony to the hard work that Benjamin put into making this deal a reality and this would have been a very proud moment for him.
- Isaac Mophatlane is CEO of Business Connexion