Networking services giant ponders Middle East entrance

One of the world’s largest networking services resellers has confirmed that it is investigating the possibility of launching a Middle East operation. South Africa-based Dimension Data - a major global ally of Cisco - currently has a team assessing the feasibility of moving into the region and expects to be in a position to make a firm decision within the next two months.

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By  Andrew Seymour Published  October 30, 2006

One of the world’s largest networking services resellers has confirmed that it is investigating the possibility of launching a Middle East operation. South Africa-based Dimension Data - a major global ally of Cisco - currently has a team assessing the feasibility of moving into the region and expects to be in a position to make a firm decision within the next two months. Despite an extensive presence throughout its homeland and a number of African countries, 8,600-strong Dimension Data has traditionally steered clear of the Middle East. However, its involvement in a trio of networking projects within the UAE and Saudi Arabia during the past 18 months has persuaded the company to examine if it would make sense to set up a permanent base in the region. Should that be the case, both Dubai and Abu Dhabi are understood to be high on its list of most likely entry points. Saki Missaikos, executive director for Africa and the Middle East at Dimension Data, told Channel Middle East: “We realise that there are potential opportunities in the Middle East and in the past six months we’ve been in the exploratory stage of asking if we should enter the market. At the moment it is really about doing a lot of research and talking to partners, such as Cisco and Microsoft, about the market. We are looking at the possibility of entering the market, but there are probably four or five different ways to do that and we haven’t made any firm commitment to it yet.” Although Dimension Data boasts a strong geographic reach in Europe, Africa, Asia and the Americas, the Middle East remains the one glaring hole in its global coverage. But with many larger enterprise customers increasing their presence in the Middle East and key vendor partners apparently willing to endorse a move, there is clearly a strong argument for a locally staffed office to be launched. “We have got to be cautious about any market that we might look to enter, but we are certainly encouraged by the vendors who would like us to be here and we believe we could service the market for their products,” said Missaikos. “Culturally, Dimension Data has aggressively focused on providing services and that probably represents the biggest opportunity in the market – being able to come in with a very strong services culture. In the next couple of months we will decide firstly on whether to enter this market, and secondly, how to enter it if so. It’s a detailed process because we need to look at the situation in terms of the growth of the market, and assess the whole political and legal environment in this region,” he added. The London-listed outfit also has to ensure that any move creates value for its shareholders, according to Missaikos. Dimension Data’s first dalliance with the Middle East occurred in 2005 when it bagged a contract with a next generation network provider in Saudi Arabia. It has since secured projects with a telecoms provider and a hotels and leisure company in the UAE, which it continues to fulfill by drawing on resources from its African operations. “We were very fortunate in that for two of the projects we were initially contacted by the client, and for the other we were contacted by a vendor,” explained Missaikos. “We looked at all three opportunities very closely – not only in terms of the profile and the creditworthiness of the customer, but to make sure we had the capacity and resources to deliver each project.” According to its latest filings, Dimension Data increased sales for the six months to the end of March 2006 by 16% year-on-year to US$1.45 billion. It also widened gross margin to 20.6% as overall operating profit rose 33% to US$37m. The company’s African business contributed the bulk of that profit following a solid half-year performance that saw a 13% jump in services revenues. Didata is a Microsoft gold partner in five continents and its employees boast more than 2,200 Cisco certifications in specialisations such as network integration, converged communications and security.

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