Datatec's local growth impeded

By Nicola Mawson, Contributing journalist

Johannesburg, 02 Nov 2006

Networking and IT services business Datatec aims to grow its South African presence, but says this would require more competition in the market.

CEO Jens Montanana says the company does not have a large presence in SA: the Middle East and SA contribute 3% to its total revenue base.

The company, he says, is "examining ways to increase our investment in SA". He adds that while its expansion does not hinge on the 2010 Soccer World Cup, the tournament will result in increased IT spend on the back of core infrastructure developments.

However, he says in order for intermediaries such as Datatec to successfully play in the local market, competition to Telkom must start offering services.

SA's second national operator, Neotel, launched in August and said it would introduce national and international leased-line services for companies in December, which would be followed by initial services for consumers in March next year. Wholesale international services for voice and Internet Protocol transit are already available.

Its launch was followed by the Department of Public Enterprises' confirmation it had created another state entity, Infraco, to provide cheaper international broadband.

Montanana says these companies need to compete against each other to create the right environment for firms such as Datatec to play in SA. "What's the point of being an intermediary [in SA] if there is only one choice?"

Despite this, he would like to see SA play a more active role in the company, along with plans to boost revenue from emerging markets in general. Liberalisation, he says, will be the catalyst, as the company is limited in terms of how far, and at what rate, it can "step out" into the market.