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Datatec told investors on Wednesday that artificial intelligence infrastructure is now the biggest growth opportunity it has, a month after announcing it would hand more than 7 billion rand ($430 million) back to shareholders.
The presentation, from the group Jens Montanana founded and still runs as chief executive, sets out a specific bet. Datatec is not trying to compete with the companies building enormous data centres. It is positioning itself for what happens when the computing moves out of them.
That shift is called edge computing. Processing that once ran inside a handful of vast facilities is moving to smaller sites closer to the businesses and customers using it, because a factory or a hospital cannot wait for data to travel to another continent and back.
Datatec's argument is that the mess this creates is the opportunity. As artificial intelligence workloads travel away from the hyperscale core, the group said, demand grows for partners providing multi-vendor integration, security and ongoing management. Complexity increases demand for trusted partners with design, integration and lifecycle capability, and for distributors who can orchestrate a fragmented value chain.
The company is built to sell exactly that. It operates in more than 50 countries through two divisions, and is among the largest information technology services businesses on the Johannesburg exchange.
Logicalis does the building. It designs and integrates what Datatec calls artificial intelligence-ready infrastructure, specialises in network and managed security, and handles edge and hybrid operations as a managed service. Westcon International does the supplying, distributing security and networking products and managing availability, inventory and financing at scale.
The money behind the strategy came from a refinancing.
Westcon International concluded agreements in June with Atlantic Park Strategic Capital II and the Atlantic Park Strategic Master Fund III, covering the refinancing of its intermediate holding company and a minority investment in it. The transaction generated about $434 million in cash for Datatec, and the group announced on Aug. 24 that it would return more than 7 billion rand of it to shareholders as a special dividend.
What Montanana has been fighting is a decade of lost value. Most of the decline came from the international operations that make up the bulk of the business, and the response has been a sequence of corporate actions to slim the group down.
He has brought in outside help to finish the job. Datatec assembled a team from the investment bank Lazard to work on unlocking value, and has said it is considering all options, including separate listings for Logicalis and Westcon International or a sale to a larger group.
It has also been buying. The group has moved into Poland and the Balkans, including the acquisition of Loial in August.
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