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The new CEO of Telkom unit BCX wants to improve the business after it lost as much as R1.6 billion in revenue. At the same time, Jonas Bogoshi wants to grow its cyber security, internet of things and data analytics arms.
Earlier this month, Telkom announced that Bogoshi would replace Ian Russell as head of the information and communications technology company. Bogoshi joined BCX in April.
“I took over from him [Russell] slightly earlier than planned,” Bogoshi said this week. “Ian was clear about his tenure. Even when he interviewed me earlier this year – around January is when we started our discussions – he was clear that his tenure in BCX wouldn’t be long.
“Ian did not resign – he is still with us. Between now and August, he is available for the transition with me.”
After that, Russell will play a role at Telkom with its CEO, Sipho Maseko.
This was after Russell and Maseko spoke last week and they agreed that his skills were needed elsewhere. Bogoshi said he did not think the move had anything in particular to do with BCX being a drag on profits in Telkom’s annual results.
“It was just a coincidence.”
Bogoshi is the third CEO at BCX in a year. BCX co-founder Isaac Mophatlane resigned suddenly in April last year and Russell replaced him. Telkom bought BCX for R2.7 billion in 2015.
“At that stage, Isaac decided that he had been part of this for a long time and it was time for him to do something else. It was nothing to do with him being asked to leave – or that is how I understand it, and I know him very well,” Bogoshi said.
“There have been some challenges when it comes to the performance of BCX. IT budgets are really under pressure. At best, they are flat. They are also declining. That affects the performance of IT companies. We are in the same boat.”
Bogoshi said two things were unique to BCX’s poor performance: the R1.6 billion loss in public sector revenue and the decline in revenue from traditional voice calls.
He attributed the public sector revenue loss to the company’s level 6 BEE rating.
“In many government entities, you need to be level 3 minimum, or level 4, to have a chance to participate. We couldn’t participate in the once-off deals like we used to do. They were quite big – sometimes we would win a contract worth R500 million. We couldn’t do it due to the BEE rating.”
Regarding the second issue, he said that just more than 50% of BCX’s revenue was from voice calls.
“What I’m going to focus on is executing those plans to arrest the decline in voice revenue.”
He said that, when BCX was a stand-alone entity, it had a high BEE rating. Then Telkom bought the company.
“There is nothing we can do on the ownership side, which is one of the biggest challenges that we had. As of two weeks ago, we are level 3.”
He said they achieved this through a number of initiatives. They worked hard to ensure they procured services from empowered companies, they invested more in corporate social responsibility – spending more than R400 million on big initiatives – and they restructured management.
“If you look at management today, the executive committee is majority black. More than 50% of the executive committee is female. All of those things combined helped us get to level 3. We now have an equal chance to bid for government business.”
A number of things still need to be done. The first is to execute the strategy to recover voice revenue. The second was to use the company’s scale and capability to grow managed services.
“The third thing we need to do is use our investment in our footprint of data centres. Many customers are moving to the cloud. We have five clouds. We are going to rationalise that. We have 10 data centres, so we have the biggest footprint over everybody,” Bogoshi said.
“We need to become a cloud broker. We don’t want to compete with people like Amazon Web Services, Microsoft Azure or Google – we want to partner with them.”
He said cloud data storage in South Africa was expected to grow at a compound annual growth rate of 16% over the next five years, and BCX wanted its fair share of this market.
“The next thing we want to do is have the largest software engineering company in South Africa. We have 2 500 software engineers – the biggest software engineering capability in South Africa. That is a very high margin business.”
Finally, they want to focus on digital transformation, which would involve the internet of things, data analytics and a cyber security offering, which would be available within the next month or so.
The internet of things refers to electronic devices in our homes, offices and cars “talking” to one another via the internet.
BCX expected this market to grow to R26 billion by 2021. In Telkom’s last financial year, the company generated R150 million from this sector.
“It is the fastest-growing part in this digital area.”
He said they had just signed a partnership with an organisation considered to be a leader in the internet of things. The name of this partner would be announced in the next two weeks.
On the data front, BCX expected the market for local big data technology and services to reach R40 billion by next year. The total cyber security market was forecast to grow from R9 billion to almost R13 billion between 2016 and 2021. In Telkom’s last financial year, the company generated R150 million by offering cyber security services.
Bogoshi has a BSc in computer science from the University of Cape Town. He was appointed chief revenue officer at BCX in April.
He has more than 28 years of experience in information and communications technology.
Prior to joining BCX, he was country manager for EMC. When Dell acquired EMC in 2016, Jonas took on the role of channel lead in the Southern African Development Community region.
He was vice-president of sales at T-Systems, CEO of Gijima AST for six years, chief of strategic services at the State Information Technology Agency and commercial sector manager at Cisco Systems.
He worked for IBM at the beginning of his career.
