NTT Acquisition of Dimension Data Opens New Chapter in ICT

Event Summary

July 15, 2010 – NTT and Dimension Data have announced an agreement of a cash offer to be made by NTT for the acquisition of Dimension Data for GBP 2.1 billion ($3.2 billion). Under the terms, each shareholder will receive GBP 120 pence in cash for each share held which is an 18% premium to the closing price on July 14th. The Dimension Data Group generates $3.97 billion in annual turnover with 25% from Europe, 13% Americas, 15% Asia, 21% Australia, 24% Middle East and Africa. The acquisition is subject to acceptance of the offer, regulatory approval and expected to close by October 2010.

Quick Take

Analytical Summary

• Current Perspective: Very positive on NTT’s prospective acquisition of Dimension Data, because the company stands to gain a vibrant network communication and integration business to sit alongside its network (i.e., NTT Com) and IT services business (i.e., NTT Data) to provide an end-to-end ICT solution. NTT gains 11,000 Dimension Data employees, expert knowledge in Cisco and Microsoft environments and a stronger global presence. NTT will also have significantly expanded its operations outside APAC. For example, Dimension Data generates 50% of its revenue in the EMEA region.

• Vendor Importance: High to NTT, because it needed to make a major acquisition to become a bigger and more credible player for global managed services. The move was also important for expanding its customer base, moving into other regions, and offering new cloud and ICT services. It was NTT’s objective to become a major player in the burgeoning IP telephony, unified communications and security markets. This acquisition will help it reach this objective as Dimension Data has very strong offerings in these areas and powerful partners in its corner.

• Market Impact: High on global IT service providers, integrators and telecom operators and vendors as Dimension Data manages $12.5 billion in networking equipment, has over 6,000 customers from all industries and designed, built or managed over 7,800 IP networks, and provided its clients with 2 million network routers, switches or blades over its 25 year-plus history. The implications of this acquisition are global in scale and impact services providers in all regions, especially where Dimension Data is the lead contractor for delivering managed services.

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