Dutch telco KPN has announced it is selling the operations of struggling IT services business Getronics in all countries except for its home territory of the Netherlands. The deal, which includes the UK arm, follows rather too much speculation and uncertainty over the future of Getronics.
The main buyer is the German “industrial holdings” firm Aurelius AG, which is paying an undisclosed sum for Getronics’ operations in Belgium, Luxembourg, the UK, Ireland, Germany, Switzerland, Hungary, Malaysia and Singapore. Another private equity player, OpenGate Capital, is buying Getronics in Latin America.
KPN also published its 2011 results this morning, and they underline why it is keen to move some of Getronics outside its realm. The IT services business saw revenue decline 3% in the year. Even at the EBITDA level, Getronics’ operating margin was practically non-existent, at 0.2%. So the business has been losing KPN money and it doesn’t offer much at all in the way of growth prospects.
Getronics hasn’t flourished in KPN, to put it mildly. Since the Dutch telco bought it for €766m in 2007, it has sold off a few country operations and allowed uncertainty to cloud the image of others (see Getronics UK for sale?). That can’t have helped performance. But more fundamentally, Getronics was already an under-scale, underperforming operation when KPN bought it. The UK business is a case in point – we have no doubt that it has some great people and tremendous solutions, but it has gradually slipped down our UK SITS rankings because, fundamentally, it is a player which lacks the scale or differentiation in the market to grow.
All of which underlines the perils of IT services for telcos, and indeed others that don’t understand the mature nature of the market. KPN saw Getronics as a source of growth – how wrong they were.
Meanwhile, it’ll be interesting to see what life Aurelius can get back into Getronics. It might view each of the country operations as units in their own right, given that there may not be huge exit potential for an IT services operation which is a non-leading player in 9 different markets, with little scope for tie-up between them. Aurelius has just sold its other IT services interest, German firm Consinto, so for now it doesn’t seem to have a grand plan to add Getronics to other assets.