AccessKenya Gets the Nod to Bid for Rival Company in Kenya

Mergers, Acquisitions and Financial Results

Internet Service Provider AccessKenya has received the regulator's nod for its first takeover bid for a rival firm since it was listed in the Nairobi Stock Exchange.

AccessKenya wants to acquire the leased line business of Today's Online, an Internet Service Provider, and had sought the approval of the Commissioner of Monopolies for the acquisition.

"This approval and migration of customers onto our network completes the acquisition and integration of Today's Online customer base with that of Accesskenya," said Mr Jonathan Somen, the managing director.

Analysts said the merger was the latest signal that AccessKenya was ready to start spending some of the money it raised from the initial public offering two months ago.

During the offer, AccessKenya had revealed that it had identified smaller ISPs for acquisition as part of the larger plan to grow its business. Acquisition of Today's Online is being seen as a precedent-setting move that tightens AccessKenya's grip on the corporate ISP market.

But some analysts fear the acquisition may enable the ISP to build enough muscle to elbow competitors out of favourable agreements with suppliers and infrastructure partners.

A recent report by a finance journal, Africa Analysis, says that AccessKenya controls more than 32 per cent of the corporate market.

Acquisiton of Today's Online by AccessKenya has several implications for both companies.

Today's says it is already benefitting from the association with the larger ISP in terms of new business, having signed up a few big customers.

"An integral part of the acquisition was also the appointment of senior personnel from Today's Online as selling agents for AccessKenya.

Since June, they have brought a number of customers to the business, including a high profile bank and a government ministry," said Mr Somen.

His company is hoping to rope in 200 more new customers to meet a set target of 1,700 by December.

Most of Today's customers have already been migrated on o the Group's network.

Although official figures were not released on the value of the hand-over, estimates place the increased revenue from 200 customers on a leased line to be in the region of Sh3 million in monthly charges.

Access Kenya's revenues for the first half of the year rose to Sh387 million , with profit before tax standing at Sh92 million for the same half year period. This compares to profit before tax for the entire 2006 of Sh70 million .

The company's share recorded a flurry of increased activity at the bourse last week, as corporate entities jostled to get a piece of the ISP ahead of the announcement of its half year results.

"Institutional investors are warming up to the ICT industry due to its vast potential and the positive changes to policies governing the sector," said Mr Chris Munene, an industry analyst at Bob Mathews, a local stock broker.

"The company recorded beautiful profits and is now seen as a good investment prospect for long term investors."

(Source: Business Daily)