Amid a flurry of negative comments about the consortium led by Dimension Data (Didata) South Africa chairperson designate Andile Ngcaba that is proposing to buy a 15,1% stake in Telkom from Thintana, telecommunications firm DataPro Group on Friday came out in support of the deal.
Some of these comments suggest that the deal is “shrouded in secrecy” and creates a conflict of interest for Ngcaba as a board member of Didata). In September, Ngcaba led a black economic empowerment (BEE) consortium that bought a 30% stake in Didata for R380-million.
DataPro MD Douglas Reed said he was surprised by the market reaction to this deal.
“This is a local private entity proposing to buy the shares of an overseas party in a South African based business — what’s wrong with that? Sure, money may leave the country, but at least a BEE consortium is able to gain a strong stake in Telkom.
“Some press reports are also alluding to a conflict of interest for Ngcaba because he is chairman designate of Didata. This is highlighted by the fact that Telkom and Didata may become competitors next year,” Reed said.
“I don’t understand the logic here because, even now, Didata’s ISP [internet service provider] arm, Internet Solutions, is both a competitor and large wholesale customer of Telkom, supplying it with a large portion of its Upstream bandwidth,” he said.
“Frankly, if it was Old Mutual offering to buy the American and Malaysian stake held by Thintana, there would not have been so many negative comments. We are not talking about selling a government interest here, or privatising a government asset. Let the process take its course.”
Concerned about Ngonyama
However, DataPro is concerned about Smuts Ngonyama’s involvement in the deal.
“What I am a bit concerned about, is just why Smuts Ngonyama, the ANC [African National Congress[ national spokesperson, is involved in the fray as an adviser. And it appears he wouldn’t mind being paid for his advisory services.
“What commercial expertise does he bring to the party in this regard, and why must a government employee be involved?” Reed asked.
Ngonyama sits on the national executive committee of the ANC and is understood to have close contacts with President Thabo Mbeki. His involvement in business circles is unknown.
Ngonyama was not available for comment. — — I-Net Bridge