Mustek's R8m AI start-up found most South African firms still stuck in pilot mode

Mustek's first year in enterprise AI has produced a small company, an operating loss and a change of plan. The JSE-listed technology distributor put R8m into a 51% stake in Business AI, a start-up with three permanent employees, and its 2026 integrated annual report now says the South African market was not ready to buy what the business was first built to sell.

That is a useful signal beyond Mustek. A distributor that sells hardware and software across the local market has found that "most South African companies" are still in pilot or proof-of-concept with AI, in the report's words. Rather than push a market that was not ready, Business AI moved towards advisory work and executive education.

The report does not say how much revenue Business AI earned or how large its loss was. The directors' report says only that it "did generate revenue, however overall they contributed an operating loss to the Group", which it puts down to set-up costs in the start-up phase.

What Mustek bought

Mustek subscribed for 51% of the newly formed Business AI (Pty) Ltd with effect from 1 August 2025. The investment sits at R8m at cost in Mustek's own company accounts. Because Business AI was a start-up, Mustek did not treat the deal as a business combination.

The original pitch, set out when the deal was announced, was a business-to-business marketplace that would connect enterprises with vetted AI vendors, platforms and data centres, earning from subscriptions and revenue sharing. The 2026 report still describes three parts: a proprietary "Business AI Specification" for how AI should be deployed, C-suite training and advisory, and certification of partners against that specification. The accredited marketplace portal is now one of three sales channels, alongside direct sales to executives and selling through distributors and resellers.

As recently as April, Mustek said Business AI was engaging more than 20 large organisations and gaining traction, according to MyBroadband.

What the first year showed

The report's performance section is candid by the standards of an annual report. It says revenue was "broadly in line" with the first plan, but margins fell short of target, which it describes as intended. Enterprise sales cycles ran longer than expected, and the cost of building the brand and certifying partners landed before revenue did.

The report also says Business AI signed "several of South Africa's most recognised enterprise brands" as clients. None is named.

For the 2027 financial year, Business AI plans an always-on advisory and governance service for executives, structured training programmes and AI-specific cybersecurity products. Chief executive Hein Engelbrecht wrote in the report that the business "remains in its development phase" and that the group is "highly positive about its long-term potential".

How it compares inside Mustek

Business AI is a rounding error in a group with R7.26bn in revenue for the year to 30 June 2026, up from R7.18bn. Headline earnings per share rose to 204.6c from 72.7c, in a year the chief executive's review credits to tighter inventory and working-capital management.

Its other recent bet beyond distribution looks further along. Cyberantix, the managed security provider in which Mustek holds 70%, reported revenue of R51.63m and pre-tax profit of R6.83m for the year, with 38 permanent staff. The report presents both as part of a plan to grow services such as software, training, cybersecurity and AI, and make the group less dependent on distribution.

What is still unclear

Investors still can't see what Business AI earns, what it lost or who its clients are. Mustek is also changing its financial year end from 30 June to 31 March, so the next set of results will cover a nine-month period to 31 March 2027, which will make the start-up's second year harder to compare with its first.

The one hard number on the table is the R8m cost of the stake, against a unit of three people that has already changed what it sells.