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MWeb wants speedy sale

By Damaria Senne, ITWeb senior journalist
Johannesburg, 03 Jun 2008

MWeb wants to be sold by Naspers as soon as possible, so the transaction is completed within three to nine months, says MWeb CEO Rudi Jansen.

Jansen was reacting to yesterday's announcement that Naspers will auction the wholly-owned Internet service provider (ISP).

He explains that Naspers and MWeb opted for an auction, rather than a straightforward sale, as this allows them to critically evaluate potential partners.

"It's not just about the money. We want to find the combination of right partners, at the right price, with the right future for MWeb," says Jansen.

However, a financial analyst, who prefers to remain anonymous, notes that an auction allows Naspers to demand a premium rate from bidders. "They'll probably take the final buyer to the cleaners," he says.

MWeb is one of SA's largest residential ISPs, with over 350 000 dial-up and broadband customers in both the home and business markets.

It also owns the largest VSAT corporate Internet base in sub-Saharan Africa and has an extensive footprint in Africa. Naspers says it has already received numerous offers for the ISP business.

Abundant suitors

MarketWorks business advisor Steve Edwards says the auction will likely attract anyone with deep enough pockets to purchase the ISP.

"I think all the usual suspects will circle the bait: Telkom, Neotel, Dimension Data, Internet Solutions, MTN and Vodacom. Perhaps even the State IT Agency (SITA) and the South African Broadcasting Corporation (SABC)," he says.

SITA would be attracted by the potential to self-provide Internet for government services, while MWeb would help the SABC provide its content on an Internet platform and fit within the convergence agenda.

Virgin Mobile may also show up, along with some other transnationals, adds Edwards.

World Wide Worx MD Arthur Goldstuck says MWeb would also be of interest to Altech Autopage Cellular, which has the resources and expertise, but lacks a large subscriber base, and Vox Telecom, which has a large subscriber base, but is in distant third place to Telkom Internet and MWeb, he says.

The mobile networks also have a reason to buy MWeb - to enter a new subscriber space, with the existing mobile subscriber base saturated, says Goldstuck. It will make for good synergies with their 3G networks and provide a natural growth area for their data services, he says.

"Vodacom, with its new ISP, is probably the readiest for it, but MTN, which is lagging behind in data services, probably has the greater need."

IDC analyst Richard Hurst believes Vox Telecom would be a strong contender for ownership of MWeb.

He also sees Telkom SA being attracted by MWeb's large South African user base and the extensive footprint it has in various African markets such as Namibia, Zimbabwe and Nigeria.

Related story:
Naspers to auction MWeb

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