Naspers pulls plug on MWeb auction

Johannesburg, 10 Nov 2008

The global economic climate has claimed yet another victim, with Naspers taking its Internet service provider (ISP), MWeb, off the auction block.

In an announcement to the JSE, the multinational media business said: “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 SA.”

While there is no clarity on what the company plans to do with the South African arm of the business, Telkom has, with no warning, snapped up 100% of MWeb Africa and 75% of MWeb Namibia from MultiChoice Africa and MIH Holdings, respectively.

Telkom will pay a total of $63 million, or around R610 million, for both. “Expanding beyond the borders of SA provides Telkom with an opportunity to become less dependent on domestic revenue streams,” says Telkom CEO Reuben September.

Both companies hope the transaction will be completed by April next year; however, the deal will have to receive regulatory approvals in the countries where MWeb Africa operates. The company is headquartered in Mauritius, with operations in Namibia, Nigeria, Kenya, Tanzania, Uganda and Zimbabwe, and an agency arrangement in Botswana and distributors in 26 Sub-Saharan African countries.

“This acquisition, together with Telkom's investment in Africa Online, is expected to increase the value proposition of our product and service offerings to all customer segments in Sub-Saharan Africa. Telkom's position as partner of choice for connectivity and related services in Africa is expected to be strengthened,” adds September.

Telkom bought into Africa Online in February last year, paying £10.3 million, or R160 million at today's exchange rate.

Many offers

No Naspers spokesman was available to detail the future of MWeb SA. The company first announced it would auction the ISP in June, after the company had received “numerous offers” for the business.

MWeb is one SA's largest residential ISPs, with over 350 000 dial-up and broadband customers in both the home and business markets. According to Naspers, it also owns the largest VSAT corporate Internet base in Sub-Saharan Africa.

At the time, MWeb CEO Rudi Jansen wanted the auction process to be completed within three to nine months. However, bidding for the company only started in early August. Both Naspers and MWeb were tight-lipped on the auction process, refusing to provide information on who had submitted offers, or how much was being offered.

Both Internet Solutions and Vox Telecoms had previously expressed interest in MWeb. The companies pointed to its “exciting customer base” as one of its attractive features, but warned that price may be a factor in any potential deal.

This is not the first deal to fall through because of recent unfavourable market conditions. Discussions about the sale of Telkom to a consortium led by investment powerhouse Mvelaphanda suffered the same fate.