JSE-listed ISP NetActive is to sell its dial-up subscriber base to M-Web for an expected R40 million. The consideration will be settled in cash, with a R2 million deposit already paid.
NetActive plans to concentrate on e-commerce enablement and communication provision in the small to medium enterprise market. The company says the purchase price will go toward organic growth and expansion in the global Internet market.
"It is good to have resources behind you," says NetActive CEO Lawrence Brick. "The market is showing explosive growth and this allows us to expand quickly."
A subscriber audit will be done in February to determine the exact number of subscribers and the final purchase price will depend on the outcome, but NetActive expects the number to be between 20 000 and 30 000, and has based its expectations on this range. If the base is smaller than 10 000 individuals M-Web has the option to terminate the deal.
The NetActive infrastructure will be used to provide virtual hosting and subscribers will retain their e-mail address and will be served by NetActive support staff.
M-Web has again concluded another slightly unusual agreement in its bid to gather subscribers. In terms of a clause in the contract NetActive will have access to certain M-Web subscribers and will be allowed to communicate with them at no cost bar the reimbursement of M-Web`s actual costs. NetActive will be allowed to use e-mail, telesales, direct marketing and online advertising to communicate with subscribers.
Earlier this year ITI "outsourced" its Club Internet dial-up base to M-Web at no cost. ITI retains ownership of the subscriber base and shares in the revenue derived from it. And then there was the earlier customer swap between UUNet and M-Web, with corporate customers going to UUNet and Internet Africa handed to M-Web.
Lawrence Brick says the communication clause may be unusual but was deemed necessary for the NetActive business. "It is quite important from our side to have access to a large subscriber base in South Africa to further our business," he says. He expects to have access to all home dial-up users.
NetActive listed in April this year, opening at 100 cents. The share closed at 60 cents before the New Year`s weekend.
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