Is Axon the next telco purchase?

TelstraClear in talks to buy Axon, sources say

The New Zealand reseller and systems integrator landscape looks set for further change and consolidation with strong indications that TelstraClear may be in negotiations to buy Axon.

Several industry sources say the talks are well past the exploratory stage, with one senior industry executive adamant that the sale is a done deal.

That’s not so, according to Axon chief executive Matt Kenealy. “No one’s bought us and nothing is on the table,” he says.

However, Kenealy wouldn’t comment specifically on whether discussions were taking place with TelstraClear.

“We’re coming in for extra speculation because we’re one of the few bigger players left,” he says. “We see TelstraClear already as a good partner and we expect to do more with them.”

TelstraClear has been expected for some time to make a bid for an IT services organisation to counter Telecom’s recent acquisitions of Gen-i and Computerland. Telecom was already well advanced on TelstraClear in the converging ICT market with the establishment of Telecom Advanced Solutions.

Earlier, TelstraClear had preliminary talks with Computerland but those proceeded no further. The telco may, at the very least, have a need to offer IT services to meet the New Zealand needs of a huge outsourcing contract it has with Qantas.

TelstraClear declined to comment on the possible Axon purchase, citing a company policy of not commenting on "commercially sensitive" matters.

Axon posted revenue of just under $60 million for its 2003 year, ended October 31, and has reportedly since shown growth of around 25%. It is owned primarily by Kenealy, with other shares held by senior executives.

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