Bidding has started in the much-anticipated auction of MWeb, being put up for sale by media giant Naspers.
MWeb CEO Rudi Jansen says the company is "in the auction process".
This follows a decision earlier this year that Naspers' wholly-owned Internet service provider (ISP) should be sold as soon as possible, and that this should not happen as an outright one-on-one sale.
Instead, Naspers opted for an auction where the highest bidder would walk away with the spoils, a move that analysts said would most likely raise more capital for the seller.
Frost & Sullivan ICT industry analyst Lindsey Mc Donald says: "In its current form, MWeb represents a fantastic opportunity for an existing ISP seeking to strengthen and consolidate its position in the market, be it a fixed or mobile provider."
However, she adds: "MWeb also presents an interesting prospect for a company that is currently not an ISP - such as a content provider looking to expand rapidly into the market. Speculation is rife, but we believe likely suitors include companies such as emerging telecommunications operators."
Jansen is not willing to confirm who, or even how many bidders are participating in the auction, or when bidding is to close, but did say "we are very pleased with progress to date".
"We are, however, conducting the process in confidence and will not disclose any information about the bidders at this stage."
Both Internet Solutions (IS) and Vox Telecoms have expressed interest in MWeb in the past. 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.
IS was not immediately available for comment on whether it is participating in the auction. Meanwhile, Vox COO Paul Muller would only say: "Our involvement in these auction talks is pure speculation; as a public company we cannot comment on speculation."
Mc Donald says a few big players, such as MWeb, @lantic.net and the mobile operators, dominate SA's ISP market.
"This is not to say there isn't intense competition among a myriad of small players, but they pale in comparison to these giants."
Frost & Sullivan expects the market to continue to show healthy growth alongside a sustained trend of consolidation.
Smaller ISPs are likely to continue to be absorbed into companies like Telkom, Vodacom, MTN, and Vox, which all have greater reach and financial clout.
"We can expect lower priced services and higher quality offerings as competition between bigger players intensifies," says Mc Donald.
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