Pan-Africa ISP MWEB is up for Auction
Only nine months after pan-African ISP MWEB bought Afsat and heralded this as the first of several acquisitions, Naspers has put the company up for auction, and a deal might be concluded within nine months. In strategic terms, Naspers is saying publicly that it is getting out of the ISP business.
Khulekani Dlamini, media analyst for Renaissance Specialist Fund Management, said the market liked the sale news as it meant a possible realisation of value for Naspers shareholders. He said MWEB had turnover of nearly R1bn a year, and the sale was unlikely to affect Naspers’ prospects much.
MWEB CEO Rudi Jansen said transition to a new majority shareholder was "always difficult", but a shareholder with a telecoms network that could also help drive MWEB's existing businesses in 26 other African countries would bring significant new opportunities.
Potential bidders had been identified. "We've started contacting them. There's been lots of interest." The aim was to sell MWEB on a "tight schedule", possibly in three to nine months, depending on Competition Board approval, Jansen said.
The announcement followed several approaches for MWEB's sale, Naspers said .
Jansen said MWEB was making profits and had more than 320,000 dial-up and broadband customers in the home and business market, 5000 corporate customers in South Africa and 24,000 corporate customers in Africa. Its market share in South Africa was more than 25%.
Although MWEB’s South African operation has borne fruit in terms of profits after considerable investment, its pan-African operations (particularly Nigeria) have made very slow progress. Over the years, it was one of the on-off potential buyers of the other pan-African ISP Africa Online that was landed by Telkom South Africa. Africa Online is still loss-making and although MWEB’s subscriber base is larger, it is hard to imagine that the pan-African element of the business makes a substantial contribution to Naspers’ bottom line.
MWEB was on the verge of investing in a wireless digital broadband network roll-out to exploit its market leadership position in the rapidly growing broadband market. "This strategy, focusing on connectivity, diverges from Naspers's core focus of online content platforms, communities and commerce," Naspers said.
The group's core focus is now on online content, communities and commerce. This includes investments in Tradus, the leading e-commerce platform in eastern Europe, Tencent in China, Mail.ru in Russia and Gadu-Gadu in Poland. Ibibo in India, Sanook in Thailand and 24.com and Mxit in SA continue to grow their communities.