BUSINESS NEWS - Friday’s speculation reported by Bloomberg that NTT Group was looking to offload African operations it acquired when it bought Dimension Data in 2010 left me a little uneasy.
It isn’t clear if the assets in question are all the group’s assets in Africa or what is far more likely: Internet Solutions (IS). Whether or not it’s only IS is immaterial.
What’s important here is the pattern. And when one considers a wave of foreign disinvestment (or of investment), timing is, obviously, critical. What would be telling – if these assets were to be disposed of – is why NTT is doing so now.
IS has never quite fit into a far larger, far more globally diverse managed services business in Dimension Data. This is not a new revelation. Inside NTT, it’s an even more uncomfortable fit. But, it could’ve been unbundled during the original DiData transaction (or, it could’ve been sold shortly thereafter). Why now?
Clearly, South Africa is not in a good place currently. A flurry of ratings downgrades over recent months has left us barely clinging onto investment grade. An unstable (and weak) currency is nothing but a headache for foreign firms who have (or have bought) operations in the country. Policy uncertainty makes long-term planning (and investment) very difficult.
If this sale of assets by NTT were to go ahead, more than R10 billion will leave the country (they are valued “at about $800 million”, according to Bloomberg).
Barclays Plc’s (slow-motion) sale of its controlling stake in Barclays Africa made everyone sit up and take notice. This is something that made global headline news. This was disinvestment writ large. The first placing (or 12.2% of Barclays Africa) in May 2016 raised over R13 billion.
The far bigger chunk (33.7%) sold this month raised nearly R38 billion. That’s a R50 billion vote of no confidence in the country, and the continent. Had ‘Nenegate’ not happened, would Barclays Plc still have made the decision to hightail it out of Africa (and, most importantly, South Africa)? A lot of smart – and well-connected – people suggest not.
Barclays Plc will argue (and it has!) that this has nothing to do with South Africa and everything to do with European banking regulation. Ho hum.
It sounds a lot like the excuse proffered by General Motors for its planned exit from South Africa, after being here for 90 years. It called it “a business decision, based on GM’s global business priorities”.
