Dimension Data's foresight has resulted in profitability, strong operating margins and a healthy cash position, according to Frost & Sullivan.

As reported in IT-Online, DiData released full year results today revealing a 0.4% growth in revenues in constant currency. Operating profit increased by 25.4% in constant currency to $194.4-million, while earnings per share were up to 8.0 US cents from 7.7 US cents in 2008. Group operating margins grew to 4.9% from 4.0% in the previous year.
"DiData's foresight has paid off in South Africa," says Frost & Sullivan ICT industry analyst Spiwe Chireka. "The company decided to focus on the public sector two to three years ago and now that we are seeing a decline in private sector spend, this move is paying dividends. For example, it is a key player in providing the IT systems and infrastructure for some of the FIFA World Cup stadia."
Chireka was particularly impressed by the performance of Internet Solutions (IS) and believes it should continue to deliver strong returns for the group. It reported outstanding revenue growth of 27.9% for the period, driven by demand for internet access, virtual private networks, voice traffic ('Voice over IS') and hosting services.
"IS has also started building its own network in South Africa since the ECNA allowed companies to self provision," she says. "This is likely to result in noteworthy cost savings as it will no longer have to depend on Telkom for access."
As local loop unbundling, which is pencilled in for 2011, draws closer IS is also set to receive radio spectrum. This will allow it to emerge as a direct competitor to both Telkom and the mobile operators in the broadband space. DiData stated that it will continue to invest in IS to position it as Africa's leading internet-technology based service provider.
Despite these successes, it is clear that the economic crisis has had a significant impact on DiData, as products still make up over 60% of the group's revenue base. Across the ICT industry, product sales have been the hardest hit.  
However, some of these losses have been offset by the overall performance of the group's services segment. This includes its systems and integration segment. Revenue from services grew by 13% over the previous year.
"DiData's services division has been growing from strength to strength," Chireka says. "Frost & Sullivan has seen an increased uptake of IT services across the world as end users look to reduce costs through optimising their current systems and outsourcing."
The group also continues to enjoy a favourable cash position, which will allow it to continue with its acquisitions strategy. It reported a cash balance of $600-million at 30 September 2009. In the current economic climate, DiData may well use this to find some bargains as businesses are likely to be undervalued.
"The group's recent acquisition of a controlling stake in Moroccan operator Telcom to increase its footprint in Africa is one example," Chireka says. "This is definitely an indication that it is thinking beyond the current tough market conditions and is seeing opportunities for future growth."
DiData announced a dividend of 1.9 US cents per share.