The acquisition of Dimension Data by Nippon Telegraph & Telephone Corp. marks the first time a Japanese mobile operator has managed to get a slice of the growing African telecom and IT market.
With the US$3.24 billion buy, NTT is expanding its geographical boundaries by taking over Africa's largest technology firm. Dimension Data over the past few years has been expanding its presence in many African countries to provide various telecom services.
The deal will likely open a window for investment in Africa by Japanese companies that have been reluctant to enter an expanding telecom market that has become the center of an investment war by international businesses.
Africa's improving telecom infrastructure, rising personal income and growing middle class are major attractions for telecom companies.
The region now has three undersea cables: Teams and Seacom, which are already providing broadband services, and the EASSY project, which will connect countries in eastern and southern Africa, going live at the end of this month.
A joint statement by NTT and Dimension Data last week said the consolidation of the two companies will create one of the world's largest integrated telecom and technology groups and is a significant platform for NTT to expand its businesses in southern Africa.
"The investment in Africa by NTT means that many Asian telecom companies, particularly those from Japan and China, will start competing for investment in Africa because NTT has opened the way for them," said Amos Kalunga, a telecom analyst from the Computer Society of Zambia.
Dimension Data has a presence in Europe, Asia, the Middle East and Africa. It is a specialist IT services and solutions provider, helping clients plan, build, support and manage their IT infrastructures.
The Dimension Data management and a majority of shareholders endorsed the offer last week and the deal is scheduled for completion in October this year. Dimension Data CEO Brett Dawson said NTT would keep the business, including its management, intact, but that it would delist from the Johannesburg Stock Exchange.