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Telecom's Gen-i sells 80-person consulting unit Davanti

Telecom's IT services unit, Gen-i has sold Davanti Consulting in a management buyout.

The deal involves 80 staff. Telecom won't reveal the price but a spokeswoman told NBR Onliine it is "not material."

Telecom has signed a conditional agreement to transfer ownership of Davanti Consulting’s New Zealand operations to Davanti principal consultants Justin Hamilton, Matt Farrar and Robert Carter.

The transaction is expected to settle on 31 May.

After the deal closes, Gen-i and Davanti will continue to partner, with Davanti staff working from Gen-i’s premises in Auckland and Wellington.

Davanti was founded in 2007 as a division of Gen-i. It works with organisations across private and public sectors, providing strategic advice, business transformation, industry knowledge, and the design and delivery of cloud-based applications. Its website lists the Ministry of Justice, TVNZ, Fulton Hogan and ACC among its clients.

The diverstment comes on the heels of Gen-i's decision to pull out of mainland Australia, and reduce the number of staff servicing Australian clients from 180 to 60.

Comments and questions
4

One sweet deal for the guys on the MBO - keep all contacts, work from current premises and leverage of Gen-i's network. Wonder if they went to market to gain the best price?

Inside job?

High value-add services to help compensate for commoditisation of fixed line and mobile services?

Nah! Who needs them!

Anyone know what Gen-i's strategy actually is?

Thank you Simon for doing that. I am not sure if it is a sweet deal. Say each is 100K, the total cost of operation per year is around $8m.

Unless Davanti can generate more than that, they are going to struggle. Excluding opex and other expenses, Davanti must be generating at least $10m worth of sales just to float. Why are they going to get that? Good Luck to the MBO. I would have prefer to spend the $8m and pump in on Mighty River and sell it off in the first day.

Simon, I hope you are not giving them free/cheap rentals at the Auckland and Wellington office. You just spent $96m on Revera, I hope you can recover the money by charging good rentals to Davanti.