Tokyo: Nippon Telegraph and Telephone Corp (NTT) is buying South African IT firm Dimension Data for up to $3.2 billion (Dh11.75 billion) to expand into overseas markets, including in fast-growing Africa.
Johannesburg-listed Dimension Data shares jumped more than 20 per cent after Japan's top telecoms operator announced the bid yesterday.
NTT plans to launch a tender offer for all outstanding shares in Dimension Data. The South African firm provides IT-related services in the United States, Europe and Asia.
"I think it's a good move to have a business base in South Africa, given its growth potential," said Fujio Ando, senior managing director at Chibagin Asset Management.
"NTT has to expand overseas operations since the Japanese market has almost reached saturation. A stronger yen provides good opportunities for Japanese companies to buy overseas assets," he said.
NTT will finance the acquisition through a combination of its own cash and debt. The deal would mark the largest acquisition of a South African firm by a Japanese company, according to Thomson Reuters data.
Japanese companies have been slow to enter Africa, which offers huge potential growth in mobile telephony and information technology, thanks to rising personal incomes, a growing middle class and improving infrastructure.
"Dimension Data was attractive in its coverage area and services," NTT President Satoshi Miura told Tokyo-based reporters via a video link-up from London.
"Dimension Data has a strong presence in emerging markets, especially in Africa, South America and the Middle East, where NTT has a smaller presence.
Strong brand power
"Its brand power is stronger than NTT's overseas. I want Dimension Data to be the core for NTT's global strategy," he said.
Miura said he expected NTT's annual overseas sales to reach $7 billion with the acquisition. Last business year, NTT made revenues of 270 billion yen ($3.05 billion) overseas, a spokeswoman said. NTT said it is offering to buy Dimension Data at 120 pence per share, a premium of 18 per cent to its London-listed shares' closing price on Wednesday.
Shares of NTT closed down 1.6 per cent at 3,705 yen, after the news was first reported by Japan's Nikkei business daily. Asian rivals have been aggressively establishing a presence in Africa.
India's Bharti Airtel Ltd last month completed a $9 billion acquisition of mobile operations in 15 African countries from Kuwait's Zain.
- $7b: NTT's expected annual overseas sales
- $3.05b: NTT's overseas revenues last business year