Thu, 25 Apr 2019

JSE-listed IT company EOH [JSE:EOH] announced on Monday that it is no longer a reseller of Microsoft software licences.

In February Microsoft issued a notice to terminate a contract with one of EOH's subsidiaries, EOH Mthombo. Before the contract was terminated EOH Mthombo was a Microsoft Channel Partner, meaning it sold certain Microsoft products or services.

EOH said Microsoft did not provide reasons for the termination.

TechCentral in February reported that the termination came after a whistleblower filed a complaint with the US Securities & Exchange Commission about alleged corruption in a department of defence software deal.

EOH said in a notice to shareholders on Monday that Microsoft is doing its own probe into contracts involving Microsoft and government, which would take six to 12 months to conclude.

"While we understand the need for Microsoft to interrogate and finalise their own investigations, we are disappointed at the unilateral manner in which Microsoft has terminated the relationship prior to giving consideration to the impact on South African corporates," the notice read.

EOH said meetings and correspondence between EOH senior executives and Microsoft SA leadership are ongoing to discuss the impact of the termination.

Microsoft has advised EOH it would not be able to enter into any discussions regarding re-instatement of the partnership until its investigations are concluded.

The IT company added that "acceptable arrangements with a pre-existing Microsoft Channel Partner, independent of the group, have been secured".

It did not say who this group was.

EOH shares were down 7.5% on the day at R13.00 at 11:55 on Monday.

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