DataPro: Why the Ngcaba fuss?

By Staff Writer for DataPro

Johannesburg, 15 Nov 2004

Internet service provider and telecoms company DataPro says it is surprised by the negative reaction to the news that a consortium led by former Department of Communications director-general and Dimension Data SA chairman designate Andile Ngcaba is planning to buy a Telkom stake.

The consortium wants to buy the 15.1% stake in Telkom held by Thintana. Last week, market watchers and organisations such as workers` union body Costau slammed the move, saying it represented a conflict of interest for Ngcaba.

Cosatu spokesman Patrick Craven said the deal "epitomised the very worst form of so-called 'black empowerment`, which benefits only a tiny elite". He noted that the inclusion of Ngcaba and ANC spokesman Smuts Ngonyama in the consortium raised fundamental questions about the involvement of former and present government and political leaders in share buying schemes.

In contrast, Douglas Reed, MD of AltX-listed DataPro, says: "This is a local private entity proposing to buy the shares of an overseas party in a South African-based business - what`s wrong with that?"

In reference to concerns that the deal would pose a conflict of interest for Ngcaba, Reed says: "I don`t understand the logic here because, even now, DiData`s ISP arm Internet Solutions is both a competitor and large wholesale customer of Telkom, supplying it with a large portion of its upstream bandwidth.

"In the telco industry you have to have a certain amount of co-operation, even with competitors. Frankly, if it were Old Mutual offering to buy the American and Malaysian stake held by Thintana, there would not have been so many negative comments. We are not talking about selling a government interest here, or privatising a government asset. Let the process take its course.

"Andile also understands the market and there could even be possible synergies with DiData."

However, Reed says there are some questions about the role of Ngonyama as advisor on the deal. "What commercial expertise does he bring to the party in this regard, and why must a government employee be involved?"