NTT puts Dimension Data on notice over performance

Dimension Data has been singled out as under-performing by a top executive from its parent company, NTT Group.

"Dimension Data is not generating profit at this stage," said Nippon Telegraph & Telephone chief financial officer Jun Sawada during a quarterly earnings call on 5 August, according to a transcription from Seeking Alpha.

NTT Group as a whole announced a 29.7 percent boost in net profit, to hit ¥193.2 billion (A$2.1 billion) for the quarter ending 30 June. The result came off operating revenues of ¥2,706.5 billion (A$29.6 billion).

The giant telco presented network services, cloud expansion and a new partnership with Panasonic as quarterly highlights, but Sawada said Dimension Data has been put on notice to turn its fortunes around.

"We have talked to Dimension Data and instructed them to seek increase in both operating revenue and operating income. In other words, they should have guidelines for both top line and the bottom line."

The Australian arm's acquisition of Oakton and sell-off of Express Data impacted Dimension Data's bottom line, according to Sawada, who is also NTT's chief compliance officer.

"The impact of Oakton, which they acquired last year, has had a positive impact," he said. "But to the contrary, they sold off certain assets… They sold off Express Data. And so generation of profit from that company is no longer relevant. So therefore, at first glance the operating profit for Dimension Data seems smaller compared as to previous year."

DiData has not made its global financial results public in recent years, but did state last year a goal to "double revenues to US$12 billion" by 2018.

Dimension Data Australia declined to comment to CRN, other than to state that Sawada's comments referred to the global company rather than the local entity.

According to the most recent financial results available from Australia's corporate regulator, ASIC, Dimension Data Australia copped a net loss of $20.1 million for the year ending 30 September 2014, down from a profit of $2.3 million in 2013. This was despite growing revenue by $118.7 million to hit $898 million.

The global solutions provider, which originated in South Africa in 1983, became a wholly owned subsidiary of Japan's NTT Group in 2010. The firm employs over 28,000 staff spread across 58 countries.