Old Mutual and its subsidiary Nedbank Group are keeping their options open with regard to their relationship with Internet Solutions (IS), both as a supplier and from an investment perspective.
The financial houses were replying to media reports last week that they were going to move their networking business away from IS and divest their combined 40% (each own half the stake) shareholding from the Dimension Data unlisted subsidiary.
Old Mutual is re-negotiating a seven-year R2.1 billion contract with US outsourcing group Computer Sciences Corporation (CSC). The seven-year contract started in 1999 and is due to expire next year.
In 1998, Nedbank (then Nedcor), Old Mutual and Dimension Data established a virtual private network and e-procurement joint venture called Omnilink. However, it is unclear if this venture is to be affected.
Angus MacRobert, IS MD, told ITWeb: "The moves to divest and to move their networking business away from us are definitely linked to their negotiations with CSC."
MacRobert says media reports that IS would lose its business to a consortium consisting of Telkom and CSC South Africa, are accurate.
In a statement, Nedbank says it has previously announced its intention to review a number of its investments in line with its strategy of focusing on the core business of banking. "We cannot comment on individual investments until a firm decision has been taken and a sale concluded," the bank says.
With regard to commentary in the media about the cancellation of Nedbank`s contract with IS, it says that from time to time all supplier agreements and relationships are reviewed, including relationships with companies in which the group has an investment.
"If companies in which we own a stake can come up with a competitive bid, so much the better. Again we cannot confirm any changes to relationships with suppliers until final decisions have been made and respective contracts concluded," Nedbank says.
An Old Mutual spokesman says: "Old Mutual regularly re-assesses its strategic relationships with product providers to ensure the best interests of Old Mutual and its shareholders are served. However, no decisions have been finalised and we are therefore not in a position to comment further."
CSC South Africa refuses to comment on the deal. However, ITWeb has learnt that the outsourcing negotiations with Old Mutual are far advanced and should be concluded within the next two to three months.
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