Didata deal opens doors to the world
2010-07-18 13:00
Siyabulela Qoza and Simon Dingle
This week’s announcement that Japan’s Nippon Telegraph and
Telephone Corporation (NTT) is to acquire Dimension Data for R24.4 billion could
enable Didata’s Africa division to expand rapidly into the rest of the
continent.
Didata Africa chief executive Allan Cawood said: “The deal will
give us access to NTT’s large balance sheet and we could pursue our expansion
quicker and have more products as a result of the link-up.”
He said Didata’s black shareholders, led by Andile Ngcaba, would
not get a cash payout from the transaction because their ownership level was
below that of qualifying owners. About half of the purchase amount could find
its way into the domestic market through a payout to local shareholders.
“The real benefit from this transaction will come from strategic
alliance. We have access to NTT’s $1.3 billion (about R9.8 billion) a year
spend, networks and data centre which will allow us to offer better services to
our clients,” said Cawood.
One of Didata’s local subsidiaries, Merchants, for example, could
run call centres for some NTT clients locally and offer its existing North
American and European customers improved services.
Cawood said the R380 million BEE deal that was concluded in 2004
could be fully paid up by the end of next year should the business continue to
perform well.
The deal was also an indication of a trend where telecommunication
firms would strive to be end-to-end IT providers, said analysts.
ICT industry analyst Spiwe Chireka said: “NTT is traditionally a
telecoms company and is now moving into providing other services.”
The trend was also evident with firms such as MTN and Vodacom,
which were moving into new areas with their respective MTN Business and Vodacom
Business divisions.
“Instead of building a separate entity, NTT is acquiring an
existing service provider,” said Chireka.
She said that MTN, for example, was expected to purchase smaller
companies in the rest of Africa as it pursues its IT strategy.
“Looking at it purely from an IT perspective, Dimension Data has a
customer base in the enterprise segment and NTT wants to get into the enterprise
space internationally. Didata has carved a nice little niche for itself in
emerging regions, providing NTT with a base for its geographic expansion plan,”
said Chireka.
Kaplin Equity Analysts’ Irnest Kaplin said it would be sad to see
Dimension Data delist, which would be part of the takeover process.
“It will give shareholders a slight premium of 20% on the last
traded price, so they’ll get a bit of cash, but they can’t take part in Didata
going forward,” he said.
“On the other hand, this is an exciting development. Dimension Data
is a people company. It is strongly entrepreneurial and the biggest thing NTT
will gain is the existing expertise and good people that Dimension Data has. If
it keeps these intact, this will be a great play for NTT,” said Kaplin.
Cawood said Didata would be run as a separate entity with its own
board and executive management team.
Kaplin added that there was also an interesting opportunity for NTT
to break into the local telecommunications space, leveraging Dimension Data’s
position in the local market and the existing operations of subsidiary Internet
Solutions.
Cawood saw this as a possibility that was still a long way into the
future.
“There will be a tremendous amount of work that will need to be
undertaken before we can enter the mobile telecommunications space,” he said.
“There are number of regulatory requirements we would have to meet. Our entry
into that space is a possibility but not at this stage.”
Chief executive of NTT Satoshi Miura said the firm was keen on
embracing Dimension Data’s entrepreneurial spirit and retaining its skills. He
said NTT had not managed to develop IT solutions for the global market and also
lacked geographic reach.
“This is where the strength of Dimension Data lies,” he said. “This
is a company which has a strong presence in rapidly growing regions like
Africa, South America and the Middle East.”
Didata chief executive Brett Dawson said NTT had a clear
understanding that operations in IT were different from the telecommunications
layer. “This is not about efficiency or cost reduction, it’s about growth.”
NTT has received undertakings to accept and recommend the offer
from the Dimension Data directors, Venfin Holdings Limited and Allan Gray in
respect of about 52% of Dimension Data’s issued shares.
- Fin24.com
- City Press