Financial

DiData speaks out on Telkom deal


Johannesburg, 10 Nov 2004
Read time 2min 20sec

Dimension Data CEO Brett Dawson acknowledges that there are potential conflicts of interest arising from the purchase of a Telkom stake by DiData SA chairman Andile Ngcaba, but says these will be properly managed.

Earlier this week Thintana Communications announced it had sold its 15.1% stake in Telkom to a consortium led by Ngcaba and Women Investment Portfolio Holdings. Smuts Ngonyama, who is the African National Congress`s spokesman, acted as an adviser to the deal.

The market welcomed the announcement, with Telkom`s share surging by 588c or 6.8% to close at 9 198c on the JSE yesterday.

However, the deal also drew criticism from some analysts, industry players and the Democratic Alliance. Concerns were raised over a possible conflict of interest arising from Ngcaba`s position at DiData, as well as the fact that Ngonyama and Ngcaba have close links with the ruling party.

Ngcaba, before moving to DiData, was director-general of the Department of Communications.

Some parties pointed out that DiData is a Telkom supplier, but also competes against the telecoms group. Internet Solutions, in which DiData has a 60% stake, is set to compete against Telkom when voice over Internet Protocol becomes legal next year.

Dawson was asked yesterday whether DiData has been concerned about the possibility of a conflict of interest.

"Well, yes," he replied. "We see Andile as a full-time operating executive at Dimension Data. The key thing is that he does not take an executive role at Telkom. But where there are areas of conflict, we expect him to recuse himself.

"We have the responsibility to manage any conflicts of interest arising."

He says while Ngcaba carried out the Telkom transaction in his private capacity, there are clearly opportunities arising for DiData. "The obvious one is for us to work better as a supplier into Telkom and extend the relationship in that dimension."

Telkom CEO Sizwe Nxasana said yesterday that he saw no conflict of interest arising from Ngcaba`s position at DiData.

"It`s a good thing," he said. "I see Telkom and Dimension Data doing a lot of good things together in the future."

Ngcaba also said there was no conflict of interest. "There is a particular way in which corporates deal with conflict when it arises. If a conflict does arise, one has to recuse oneself. That is what happens."

Related story:
Telkom welcomes new shareholder

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