M-Web buys Tiscali SA for R320m

By Paul Vecchiatto for Tiscali
Cape Town, 20 Aug 2004

M-Web is the winner in the race to buy Tiscali`s South African operations for a sum of R320 million, according to the European-owned Internet service provider (ISP).

Tiscali`s Italian-based head office says the agreement has been reached for the disposal of its South African ISP subsidiary, in line with the group`s strategic plan to focus its financial and managerial resources in its key markets.

The sale of Tiscali SA has drawn a lot of interest from the ISP industry players and initially 15 companies and parties expressed interest in buying the operations.

Speculation on a bid of about R400 million by Telkom drew the ire of the ISP Association, which threatened to take the issue to the Competition Commission should the partially state-owned telecommunications group be the winner.

Tiscali entered into an agreement with M-Web, the country`s largest consumer-oriented ISP with about 250 000 subscribers. The Tiscali transaction will add another 100 000 subscribers to that base.

The transaction is subject to the approval of the South African competition authority. The agreed price for 100% of the share capital of Tiscali is R320 million (40 million euros) to be paid in cash upon closing.

Tiscali says the agreed consideration does not include the cellular business, which will be the object of a separate transaction expected to take place before year-end. The price for the disposal of the cellular business is expected to be more than five million euros (R40 million).

"From a Tiscali SA perspective I am satisfied with the conclusion of the sale process, and it is now simply a matter of waiting for the completion of the deal. Until then it is business as usual," says Diego Massida, MD of Tiscali SA.

"As far as our clients are concerned, I do believe that this is the best outcome. The buyer is a solid and established ISP in SA and will be able to continue delivering service at the standard our clients are accustomed to."

M-Web CEO Kim Reid says the deal will allow his company to save costs by sharing infrastructure across a larger subscriber base.

The two businesses are similar in nature, which will allow M-Web to improve the product range it offers to its business customers, says M-Web.

"I believe the consolidation of the businesses will be good for the local Internet user and in particular for M-Web and Tiscali customers," Reid says.