24 August 2015 marked a historic day in the history of Business Connexion Group and in particular for Isaac Mophatlane, Group CEO, as the company delisted from the Johannesburg Stock Exchange, following the successful acquisition by Telkom and after trading for over 11 years as an independent listed company.
The journey for 23-year-old twin brothers Benjamin and Isaac began with their vision to start an IT company, coupled with their ambitious drive to make it succeed. Isaac Mophatlane, CEO of Business Connexion reflects on the journey and what they have achieved.
“Ben and I discovered computers at the age of 12 and were immediately fascinated,” says Mophatlane. “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 (SAB) to study accounting.”
He believes that they 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.”
The dawn of the IT era
The Mophatlane brothers 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.”
He believes that the work they 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.”
Mophatlane believes that at the tender age of 23 they were far too young to be afraid of taking risks and this was probably their 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.”
Gearing for growth
While Business Connection earned revenues of R100 000 in the first year, the Mophatlane twins had no intention of staying small, which resulted in them moving away from being a reseller to becoming a software integrator. By 1997 they 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 R100-million contract was awarded to them by Telkom to supply their entire user base with Microsoft licenses.
“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.”
Growth through mergers and acquisitions
The first merger took place in 1999 with Dutch-based Getronix, and then joining forces with Seattle Solutions in 2001. The brothers continued on their journey to become a force to be reckoned with, building on an already well-known and respected brand.
Mophatlane says that their pursuit of growth and sustainability highlighted 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 R3-billion.” 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, a bid that proved unsuccessful.
In 2007 Benjamin Mophatlane became the CEO of Business Connexion Group and on the foundation of a corporate restructure, started an exciting period of organic and acqusitive 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 R7 billion with almost 7000 employees in offices in Africa, the Middle East and the UK.
Board Based Black Economic Empowerment
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 Board Based Black Economic Empowerment, a further 10 developmental organisations were included in the Business Connexion “A” Share transaction in concluded in 2008.
These organisations included Ditikeni Investment Company Limited, League of Friends of the Blind, Sakhikamva Investments (Proprietary) Company Limited, Business Connexion Education Association, Cape Flats Development Association, Combined Churches in Action, CIE Investment Company Limited, Community Outreach Programme (COP) Trust, Freewheel Trade and Invest 36 (Proprietary) Limited and YWCA Dube Charitable Trust (YWCA).
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 R72,7 million which was distributed to all parties to this deal.
Where to from here?
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 telecoms 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.”
Looking back, Mophatlane says that it has been an emotional ride and Benjamin was hugely instrumental in ensuring that this deal succeeded. When Benjamin tragically passed away just over a year ago, Isaac stepped into his place as CEO of the Group. “The conclusion of the deal 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.”
Both brothers have been instrumental in the tremendous growth of the organisation. In the collective 11 years that they have been at the helm of Business Connexion, the company has grown from R3-billion to over R7-billion in revenues and has increased its footprint on the African continent, something which will be a key benefit to Telkom. Since August 2014, after the passing of Benjamin, Isaac took the baton and continued the race. This resulted in the company increasing revenues by 16% in the first half of the 2016 financial year, driven by new client wins.
Better service to customers
The new combined entity will be a leading provider of ICT services, a centre of excellence to foster innovation and a hub for ICT skills on the continent. “Business Connexion has always been at the forefront of innovation and we continue to drive this through our MyWorld of Tomorrow initiative, which aims to create a collective movement of forward thinkers. In line with our vision, to be the Leading Enabler of the Internet of Things, this is a particularly exciting forum for us to collaborate with key stakeholders, to embrace innovative ways to thrive in an increasingly digitised and connected world.” he adds.
“Our customer-centric culture has always set us apart and we will continue to ensure we deliver value to our clients, in a rapidly changing technological environment. As part of our goal to become the leading enabler of the Internet of Things, we will continue to take our customers on a journey to, through and beyond the cloud,” Mophatlane concludes.