Last week was a good one for Vox Telecom (Vox). It took over Absa’s Internet access business and bought Cape Town-based Storm Telecom

Last week was a good one for Vox Telecom (Vox). It took over Absa’s Internet access business for an undisclosed sum, cementing its place as the third largest Internet service provider (ISP) behind Telkom Internet and M-Web. It also bought Cape Town-based Storm Telecom in a R360m deal.

The week was capped by the news that Vox dominates the AltX 15, the index for the top 15 companies on the JSE’s junior board. Vox’s weighting within the AltX 15 stands at 24,3%, followed by Blue Financial Services at 16,5%.

Vox executive chairman Tony van Marken is justifiably happy. He points out that these announcements came after the company put out a statement saying that headline earnings per share (EPS) are expected to be 100%-120% up from the 3,36c for the year to end August 31.

Van Marken said the rise in headline EPS is despite the dilution from using shares to pay for nine acquisitions over the past few years.

Vox CEO Douglas Reed expects more takeovers in the sector. “At this stage it’s a bit of a land grab,” he says.

The appetite for mergers in the telecom sector has increased following the introduction of the Electronic Communications Act, which is meant to open up the market.

Large operators like Telkom and MTN have issued cautionaries, and even a smaller player like FoneWorx has signalled that it is in the process of closing a deal. Recently listed Huge Group, the least-cost-routing telephony company, bought rival CentraCell for R80m.

Reed says the acquisition of the Absa ISP will not only increase Vox’s range of products, it also beefs up its leverage for negotiating discounts from larger telecom operators.

Increasing economies of scale is key to how Vox does business. It buys bandwidth at wholesale prices from large operators like Telkom, and then competes with them by selling this bandwidth to its customers.

Reed says Vox has no plans to develop its own telecom infrastructure and become a competitor to the likes of Telkom, MTN, Vodacom and Neotel. He says technology is changing so fast, it will be risky for the group if it invests in new infrastructure that could be outdated in five years’ time.