Updated: Cellnet flags possible IT business sale

Updated: Cellnet flags possible IT business sale

ASX-listed distributor sells off NZ IT business to Datastor and reveals plans to offload Australian IT business

The fate of Cellnet’s IT business has hit the spotlight following revelations that it is looking to sell the division. The news comes off the back of the distributor’s (ASX: CLT) decision to offload its New Zealand IT operations to Datastor.

The IT NZ sale was part of an ongoing strategy to focus on its core competencies and invest in areas of better profitability, Cellnet said in an ASX statement. Financial details were not disclosed.

The deal is expected to release $1 million in working capital and have a negligible effect on annual earnings, Cellnet CEO, Stuart Smith, said. The majority of staff will be offered alternative employment with Datastor.

In the statement, Cellnet also revealed plans to sell-off its Australian IT business.

“The future of the Australian IT operations are under discussion with IBM with a view to a sale and further information will be released as it becomes available,” the statement read.

Last year, rival distributor, Dicker Data, revealed it had been in discussion with Cellnet’s majority owner, CVC Ltd, to acquire parts of Cellnet’s business.

IBM partner director, Andrew Baker, confirmed the pair were in discussions about the future of Cellnet’s IT operations. More announcements are expected over coming days, he said.

“We are working with them on what to do going forward,” Baker told ARN. “We are talking to all our distributors and keeping the focus on finishing strongly for the year end.

“Beyond that, there’s not a lot we are at liberty to say.”

Cellnet said it will continue ramping up its retail and telco businesses.

“The continued development of the retail segment of the business continues with the recent appointment of additional brands including master distribution agreement in New Zealand and Australia for Siemens and iWorld, as well as the addition of Lexar,” it stated. “The recent rollout of new accessory packaging for the telecom channel, is also part of the continued investment into this segment.”

Cellnet is expecting to post up to $12 million in losses in the full year to June 30, according to recent guidance documents.

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