Telkom buys MWeb Africa

Johannesburg - South African fixed line telephone group Telkom has agreed to buy all of MWeb Africa and a 75% stake in MWeb Namibia from Naspers for R610m, it was announced on Monday.

"The acquisition further reflects Telkom's strategy of expanding and deepening its footprint in key markets across sub-Saharan Africa" Telkom CEO Reuben September said.

These shareholdings will be acquired from MultiChoice Africa Limited and MIH Holdings Limited respectively, which are members of the Naspers Limited Group.

MWeb Africa is an internet services provider in Sub-Saharan Africa (excluding South Africa) and also provides network access services in some countries.

Although its operations are largely focused on corporate customers, MWeb Africa's predominantly satellite-based Internet access offerings allow the company to reach a wide range of customers, many of whom are not reached by traditional fixed-line infrastructures.

The MWeb Africa group is headquartered in Mauritius with operations in Namibia, Nigeria, Kenya, Tanzania, Uganda and Zimbabwe, an agency arrangement in Botswana and distributors in 26 sub-Saharan African countries.

The successful conclusion of the agreements being entered into is subject to conditions precedent, including regulatory approvals being obtained in certain African jurisdictions.

The successful conclusion of the agreements is subject to conditions such as regulatory approvals from certain African jurisdictions.

The transaction follows hard on the heels of Telkom's decision to get out of the Vodacom joint venture with Vodafone, in a move hailed by analysts as "freeing" the fixed line operator to compete and expand.

September said the transaction gave impetus to the Telkom's stated goal of becoming a pan-African integrated service provider through acquisitions of mobile and IT companies.

"Expanding beyond the borders of South Africa provides Telkom with an opportunity to become less dependent on domestic revenue streams," he said.

The acquisition was praised as "the step in the right direction" by one telecom analyst, saying it formed part of the broader ICT convergence strategy following similar acquisitions by rivals Vodacom and MTN in recent months.

"MWeb is a good brand name and the cost of the deal is not too high. From a strategic point of view it is a good deal and forms part of the broader theme of ICT convergence as we've seen with Vodacom and MTN," said the analyst, who has an outperform rating on the stock.

MTN is the process of buying local ISP Verizon SA for R1.4bn but its rival bidder for Verizon SA, Altech (ALT), is opposing the deal, citing potential anti-trust violations; and Vodacom has just completed the US$700m acquisition of network and satellite services company Gateway Communications.

Terminate the auction process

MWeb Africa is among the leading ISPs to both businesses and it is planning to invest in the rapidly growing wireless broadband sector.

South African media and entertainment firm Naspers is no longer selling its local internet service provider Mweb South Africa.

"Given economic conditions globally and the contraction in credit markets, shareholders are also advised that Naspers has terminated the auction process for the disposal of Mweb South Africa," it said in statement to the JSE.

I-Net Bridge