In the second vote of confidence in an economy ravaged by the Covid-19 pandemic this week, Dimension Data’s Japanese parent will double down on its investment in the Johannesburg-based IT company.
"NTT [Nippon Telegraph and Telephone] has made a decision to double down on the Middle East and Africa. We’ve recommitted to the region and we will not dilute our equity in Dimension Data," CEO Abhijit Dubey told Business Day on Thursday.
Dubey’s comments come days after beer maker Heineken said it was in talks to buy a controlling stake in local drinks group Distell, potentially boosting President Cyril Ramaphosa’s drive to unlock more than R1-trillion investment for the economy.
NTT’s decision to keep Dimension Data also shuts the door on the possibility that the regional unit would make a return to the JSE after a review of the Tokyo-based company’s portfolio, valued at over $100bn (R1.4-trillion), sparked speculation that Dimension Data could be on the chopping block and possibly become a publicly traded company again.
Dimension Data is already spending R1.6bn to build a data centre in Johannesburg, to capitalise on the growing demand for remote data storage and other IT services in the region, which Dubey and Werner Kapp, who looks after the Middle East and Africa operations, said was expected to increase sales at double digits. The company is also spending R500m to expand its local network.
"We view the region as strategically important to the group. We think there’s a lot of potential for growth, especially for services that NTT provides," said Dubey, who was named as CEO of the world’s third-biggest IT company in December.
Kapp, who was promoted to the role in April after serving as COO for six years, said they are looking to make similar investments in their other territories, particularly Kenya.
Co-founded in 1983 by Jeremy Ord, who is executive chair, Dimension Data accounts for a fifth of NTT’s revenues of the equivalent of R1.5-trillion. It employs more than 10,000 people in 15 countries across the region and SA accounts for 70% of the business.
After surviving the dot.com bubble two decades ago, Dimension Data has grown into a stable business selling everything from networking equipment to IT security, and attracting a $3.2bn (about R45bn in today’s money) takeover offer from Japan’s NTT in 2010. It was once one of the largest technology companies on the JSE, with a market cap of R77bn at its peak in September 2000.
NTT’s commitment comes at a time when IT companies have come under the microscope for their dealings with the government. Competitor EOH, whose business with SA’s government accounts for 20% of its revenues, is fighting to regain credibility after becoming entangled in underhanded dealings that have the tech company embroiled in the state capture project.
Even so, Kapp said their business with the state, accounting for 25% of Dimension Data’s revenue, remains a key focus.
"We have been awarded contracts by some of SA’s biggest parastatals and our engagements with them have been very professional."
This latest news comes after Dimension Data completed a restructuring of its operations and consolidated its various businesses under one name.
The company now operates as One Dimension Data, except for its internet service provider, MWeb, and business process outsourcing unit Merchants.
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