EMEA still strong for DiData

Johannesburg, 13 May 2009

Dimension Data's Middle East and Africa presence is still the strongest contributor to its financial results.

The company has released its interim results for the six months ended 31 March 2009, which show the region grew revenue by 30.4% and operating profit by 18.8%, to $35.8 million. It is one of the few IT specialists that have reported strong growth over the period.

Both of DiData's telecoms-related businesses, Internet Solutions (IS) and Plessey, showed encouraging returns for the multinational. IS was one of the local telecoms companies to benefit from the conversion of value-added network services licences to electronic communications network services licences, giving it the right to self-provide.

While the fruits of self-provision have yet to be realised for most telecoms businesses in SA, IS has focused on several market trends, such as hosting services and VOIP. According to DiData, it used that focus to grow revenue by 37.4% in the first half of the year.

However, the company says increased competition through the VANS conversion has decreased margins for IS, although it did not specify the actual decline.

IS has the opportunity to provide voice and data solutions to its customers, and it has been planning its future solutions through growing bandwidth capacity. “IS can now also connect directly to international gateways for international bandwidth and has committed to purchase capacity in the new East Africa Coast (Seacom) and West Africa Coast (WACS) undersea cable systems,” says DiData's CEO of EMEA, Allan Cawood.

Access to both these cables will allow IS to sell wholesale capacity to competitors.

Plessey, DiData's infrastructure business, also dropped margins. According to Cawood, lower margins for Plessey can be attributed to a slow down in orders and investment in certain large South African tenders.

Despite lower margins, Plessey did grow by 57.5% over the first half of the year. The company will most likely boost its margins for the last half of the year, once the South African tenders kick off.

One of its contracts locally is the national long-distance fibre project initiated by Neotel and MTN, which will see 5 000km of fibre laid for the telecoms companies. Plessey will lay the first 592km of the project.

For the DiData group, the half year has been strong, with revenue up by 8.1% and overall operating margins up 0.7%. Operating profit for the year is up 37.4% to $88.8 million.