The Japanese telecommunications company, NTT, has ageed to acquire Dimension Data for $3.2 billion. The rationale for the transaction is to expand NTT's international IT services business. Dimension Data provides a suite of IT services, mainly focused around communications networks. The company has a geographical presence in South Africa, the Middle East and Australia. NTT is seeking to expand its scope beyond telecoms and offer cloud computing services and has already built a business of hosted data centres, focusing on Asia, the US and Europe. The aim of the Dimension Data acquisition is to create a market leader in IT and communications services by building on the complementary strengths of both businesses.

Nippon Telegraph and Telephone (NTT) is a holding company, whose subsidiaries provide fixed-line telephony, mobile telephony, broadband data communications and related products and services. The group primarily operates in Japan. It is headquartered in Tokyo, Japan and employs 196,296 people. The group recorded revenues of JPY10,416,305 million ($104,163.1 million) during the financial year ended March 2009 (FY2009), a decrease of 2.5% over FY2008. The operating profit of the group was JPY1,109,752 million ($11,097.5 million) in FY2009, a decrease of 14.9% over FY2008. Its net profit was JPY538,679 million ($5,386.8 million) in FY2009, a decrease of 15.2% over FY2008.

Dimension Data Holdings is an information technology (IT) services and solutions provider. The company utilizes its expertise in networking, security, operating environments, storage and contact center technologies and its skills in consulting, integration and managed services to create customized client solutions. The company primarily operates in Europe, Middle East and Africa. It is headquartered in Johannesburg, South Africa and employs about 11,030 people. The company recorded revenues of $3,973.1 million during the financial year ended September 2009 (FY2009), a decrease of 11.9% over 2008. The operating profit of the company was $192.9 million in FY2009, an increase of 5.9% over 2008. Its net profit was $135.2 million in FY2009, an increase of 14.2% over 2008.

Cloud Computing Set to Grow

The cloud computing services market is expected to balloon to $222.5 billion over the next five years. The new report indicates that the market for cloud computing services will reach that $222.5 billion market by 2015, fueled by end users modernizing their networking infrastructure, further proliferation of the Internet and the tumultuous economy. Those factors combine to create a perfect storm in which companies will upgrade their networks to cut costs and boost performance, the report indicates.

Solution providers stand to gain from the predicted cloud computing services market explosion, as a large chunk of the $222.5 billion will move through the channel. Analysts noted that the cloud computing services charge will be lead by marquee cloud vendors including Amazon Web Services, Google, IBM, Microsoft, Rackspace, Salesforce.com and many others.

Author: Paul Chapman, Analyst