Telecom CIO Mark Ratcliffe was last week playing down any conflict of interest after discussions with partners EDS and Computerland over the telco’s $62.5 million purchase of Gen-i.
Telecom outsources the management of its IT services to EDS and has a sales partnership deal with Computerland.
Ratcliffe says Telecom now has the capability to do some work that EDS does but says its focus will be below the customer space that EDS would focus on.
“We’ve got eight years of a 13-year deal with them to go, and there’s no need to make any major adjustment.”
There are no implications for Computerland, he believes. “We think Gen-i and Computerland operate in slightly different spaces, Computerland in the medium-to-large enterprise and Gen-i in corporate and government.”
Ratcliffe says he will be having discussions with EDS NZ chief Rick Ellis and Computerland boss Chris McKay.
“I’ve also talked to [Gen-i CEO] Garth Biggs to reassure him that we bought the company for the expertise of the staff. We think they’re a very strong bunch of IT professionals.”
Computerland CEO Chris Mackay describes the situation as business as normal. “We see our relationship with Telecom continuing. These days any partner can also be a competitor” says McKay.
Mackay says time will tell if there is more consolidation to come in the market.
Gen-i’s 716 staff will be merged with Telecom Advanced Solutions’ 500 staff. The combined revenue of TAS and Gen-i will exceed $250 million a year
Ratcliffe says there are no concrete plans yet on the shape of the business. “Our intention is to keep the Gen-i brand and look at opportunities to merge different things.
“The acquisition of Gen-i will help move Telecom and AAPT further into the ICT space in both New Zealand and Australia and fully integrate telecommunications and ICT delivery right to the desktop for our business partners.”
Gen-i’s Australian business is largely based in Melbourne.
He says he expects no changes in management. Subject to discussions, Biggs and TAS head Chris Quinn will report directly to Ratcliffe. That suggests that only parts of TAS will be merged with Gen-i.
Asked whether Telecom had an interest in also buying Computerland, Ratcliffe says he won’t speculate on market rumours. TelstraClear, which withdrew from the Gen-i bid, is thought to be in the market for a systems integration partner in New Zealand and is understood to have considered Computerland.
The Gen-i deal is expected to be closed within a few weeks. Ratcliffe says he doesn’t expect any problems.
“We’re buying the cashflow and a few assets. Any cash in the business belongs to Eric [Watson, whose Cullen Investments is the seller].”
Gen-i earned revenue of $155 million and EBITDA income of $7 million for the year ended April 2004.