Information and communications technology (ICT) mogul Robert Gumede has set his sights on consolidating struggling ICT companies to form a South Africa-based global giant, following his company Gijima’s acquisition of T-Systems SA (TSSA) in a deal believed to be about R600 million.
Gijima, a 100% black-owned company, beat ICT giants such as Telkom BCX, Mahindra of India, Altron, Vodacom, MTN, Datacentrix and IBM in their bids to buy TSSA’s businesses, which include major local and international private-sector clients.
TSSA’s only public-sector client when the deal was finalised was power utility Eskom. Gijima also inherits TSSA’s 500 highly skilled staff members, intellectual property, immovable and movable assets (which include a high-tech tier 3 data centre), clients and suppliers’ contracts.
Gijima’s CEO, Maphum Nxumalo, said Gumede had what it took to form a global ICT giant because his other company, Tourvest, had grown into an organisation that employed 7 000 people across the world.
“He has this ambition, especially now that many IT companies are victims of tough economic conditions and the Covid-19 impact. He’s proven himself as a black business leader, serial entrepreneur and philanthropist,” said Nxumalo.
The Gijima/TSSA deal came with a history of a frosty relationship between the two companies over a five-year R1.5 billion IT data services tender that Transnet wrongfully awarded to TSSA in 2017. Gijima had scored more points during the bidding process and had quoted R500 million less. It took Transnet to the Johannesburg High Court and won its case, as it appeared that former Transnet board chairperson, Stanley Shane, who had links with the controversial Gupta family, had played a big role in thwarting Gijima’s bid.
After the court process, Gijima started delivering to Transnet – a transition process that Nxumalo said was seamless.
“Gijima and TSSA won Eskom contracts respectively in April and, again, clients and staff were transitioned seamlessly to Gijima. More than 350 former TSSA staff members have been transitioned to Gijima, who serviced both Transnet and Eskom contracts,” said Nxumalo.
“It’s historic in the local ICT industry for a global giant like T-Systems International to sell its local company to a local 100% black-owned company. This is great for transformation and Gijima paid cash for the business, unlike other broad-based BEE deals, which are vendor-financed,” he added.
Gijima, said Nxumalo, had survived torrid times when most black-owned IT companies folded because the BEE Commission had relaxed broad-based BEE requirements for white-owned companies, which had led to 100% white- and foreign-owned IT companies winning government contracts.
“Furthermore, politics were used to target black IT companies from winning tenders. Gijima was one such victim, as it lost numerous contracts. It survived because of its private clients when it was tough, which led to it exiting the JSE in 2014,” he said.
Gijima generates about 70% of its revenue from private-sector companies such as the four top banks, insurance, energy, retail, manufacturing, mining, automotive, petrochemical, hospitality, healthcare and telecommunications companies.
Black Business Council president Sandile Zungu said the deal had created a level 1 broad-based BEE leader in the ICT sector.
“Through its acquisition of German-based T-Systems International, Gijima is demonstrating that it’s possible for a black-owned company to grow from humble beginnings into a global player.
“The Black Business Council is positive that, through such developments, more and more black- and women-owned companies can reach greater heights and become role models for up and coming companies,” said Zungu.