By Somalilandtimes network

By Thabiso Mochiko

Johannesburg, April 4, 2006 – The move into the east Africa region by Dimension Data (Didata) could be a bumpy journey for the global information technology giant as it was a difficult market, analysts have said.

Didata said yesterday it had acquired a 51 percent stake in ICL East Africa (ICLEA) for an undisclosed amount as part of its Africa expansion. The acquisition includes ICL operations in Kenya, Tanzania and Uganda and marks Didata's entry into the east Africa region. It would offer services such as converged communications, security and data centers.

African Harvest Fund Managers portfolio manager Rajay Ambekar said Didata's expansion into Africa was expected, but added that it was not an easy market to operate in.

"The business can sometimes be quite [difficult] as big contracts come and go. The African market also has a large dependence on donor funds, whose predictability is difficult. Companies that operate in Africa also tend to experience costly delays in the awarding of contracts," he said.

James McCormack, Didata's chief operating officer for emerging markets, said the issue of dependence on donor funding was partially true when it came to government-driven business in the region.

"While government projects are an important subset of the business across [East Africa], we see enough outside of the government sector to provide us with sustainable growth in the region," he said.

ICLEA will be renamed Kenya Didata and will be the group's headquarters for east Africa. It will be used as a platform for the group's operations in Kenya, Uganda, Tanzania and Ethiopia and especially for the reconstruction of southern Sudan, Rwanda, Burundi and Somaliland.

ICLEA, a member of the Sameer Group, which has a stake in cellphone operator Celtel, has over 60 employees across the east Africa region and has been operating since 1930. ICLEA clients include Barclays Kenya, Celtel, Telkom Kenya, Standard Chartered Bank, Nestlé Foods and Coca-Cola East and Central Africa.

Didata expects the east Africa region to become an "important" contributor to its emerging African business.

Last year Didata, which has a primary listing in London, entered the Nigerian market with the acquisition of a 51 percent stake in Nigerian technology group Roe.

Didata now has operations in the northern, southern, eastern and western areas of the continent. The group has not ruled out the possibilities of expanding into Angola.

Didata's share price gained 8c to close at R5.93 on the JSE yesterday. The software and computer services sector gained 0.47 percent.

Source: Business Report