MWeb Africa fetches R620m

Johannesburg - Parts of internet service provider (ISP) MWeb, which was put up for sale by parent Naspers in June 2008, have been sold to Telkom.

The telecommunications company will acquire MWeb's operations outside of South Africa and a 75% stake in MWeb Namibia for $63m (about R620m).

The price for the non-SA operations of the ISP is at the upper end of expectations, considering that as a whole MWeb was seen as fetching about R1bn (although the company is said to have wanted at least twice that figure).

MWeb Africa is based in Mauritius. It has mostly corporate clients and has offices in Namibia, Nigeria, Kenya, Tanzania, Uganda and Zimbabwe. It also has a presence in Botswana and a score of sub-Saharan distributors.

MWeb SA has over 300 000 subscribers, mostly small businesses and consumers.

The SA operations were left out of the deal; a marriage of Telkom's ISP, Telkom Internet, and MWeb would have dominated the consumer internet access space in the country and a deal probably wouldn't have received competition commission approval.

Apart from local cellular operators and ISPs such as Vodacom, Vox Telecom and Altech being mentioned as possible buyers, rumours of an international bidder centred on Middle East-based Zain (formerly CelTel).

Zain has expressed interest in expanding into SA and has dramatically increased its exposure in the country, for instance with heavy advertising on local television during the Olympic Games.

Thanks to Altech's victory over the department of communication regarding network service providers' right to self-provide infrastructure, the competitive landscape has been dramatically changed.

Altech itself is appealing MTN's acquisition of corporate ISP Verizon Business, although further consolidation is likely in the industry.

Only a few SA ISPs have deep enough pockets to roll out their own networks, but acquiring MWeb customers would supply a strong base to sell new wireless technologies such as Wi-Max into.

- Fin24.com