Cape Town, 02 Jun 2004
Internet communications group Tiscali International`s SA operations are in the throes of a bidding process that has been narrowed to five possible buyers. There is speculation is that the asking price is more than R300 million.
Sources familiar with Tiscali South Africa say that the final list of five bidders has been selected, and that due diligence investigations are now underway. They expect the winner to be announced within the next two weeks.
While the identities of the final five bidders have been kept a closely guarded secret, there is considerable speculation that at least two of the country`s top four Internet service providers (ISPs), namely Telkom and M-Web are in the running.
"Initially about 15 companies expressed interest in bidding for Tiscali and this was narrowed down to five once all bids below R300 million were rejected," an industry source told ITWeb.
Tiscali South Africa CEO Diego Massida confirmed that the due diligences were underway.
"We are in the process of selecting a potential buyer and the list has been narrowed down to a few companies. Initially, there was a very high number that expressed interest," he said.
Massida said the only other comment he was prepared to make was that the sale would be concluded by the end of this year.
Currently Tiscali is rated as the second largest ISP in South Africa`s dial-up market with around 100 000 subscribers. M-Web is the largest with around 250 000 and Telkom Internet and Absa Internet run close in third and fourth place.
If a price of R300 million or more is paid for Tiscali, the buyer is then paying R3 000 per subscriber, more than three times the price paid at the height of the Internet boom four years ago.
"This means that whoever is bidding for Tiscali is willing to pay a premium for its subscribers. The dot-com over-evaluation hype is not over yet," one industry analyst says.
The sale of Tiscali South Africa has been mooted since the Italian-owned group announced its fourth quarter results in February.
Tiscali reported fourth-quarter gross revenues of 267.8 million euros, up 33% on the same quarter a year before. SA accounted for 3% of that figure.
At that time Tiscali International`s group executive chairman Renato Soru said the group might divest from SA, Switzerland, Norway and Sweden in order to focus on its core European markets.
However, the local office then said the idea that Tiscali would withdraw from SA was the result of a misunderstanding because of a statement taken out of context.
In April, Tiscali SA issued a statement that emphasised that closing the local company was not an option.
"The decision to sell the local operation is by no means a done deal. It would depend on whether conditions of any such sale are satisfactory for Tiscali," Massida said at the time.
Tiscali became the sole owner of the local operation in January 2002 when it bought Vodacom`s 40% stake in ISP World Online for an unspecified sum. Tiscali took over Dutch-headquartered World Online in late 2000.
World Online had partnered with Vodacom in SA in 2000 to merge a number of ISPs. Tiscali initially bought 60% of the business from Vodacom, later acquiring a further 40%.
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