Behind the scenes at Afrihost's offices

Bryn said:
No, there are a bunch of us that have been relatively unaffected. Streaming had become an issue for me prior to Afrigreen being set up, but since switching over it's been 99% great.
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I havent switched to Afrigreen yet, you reckon its worth it?
 
Looks like an awesome place to work.

Could this be the reason their network is so rubbish though? Everyone's too busy enjoying the braai area and open bar.
 
Shalin_ZN said:
Looks like an awesome place to work.

Could this be the reason their network is so rubbish though? Everyone's too busy enjoying the braai area and open bar.
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Yeah - look at the images.

dev team office - empty (don't blame them, horrible cramped desks)
boardroom - empty
work area - 3 people
server admin - empty
brand team area - empty
management office - empty
entertainment area - people
gym - people

Where's the peeps?
 
If AH really had a sense of humour they would kit one wall out with trace route and speed test wallpaper.
 
Bathrooms aside, here's a more interesting Afrihost story.

Digging into MTN’s R408m Afrihost deal

More questions than answers.

It’s fair to say that MTN’s purchase of internet service provider Afrihost in late 2014 caught most of the industry by surprise. Not because MTN paid over R400 million for half of the business (which no one knew at the time), but because this meant MTN suddenly owned a consumer ISP.

Now, ISPs – especially consumer-facing ones – are tough businesses. Sure, there’s annuity income and (very) predictable cash flow, but margins on many broadband products aren’t exactly large. This is a volume game.

It’s worth noting that larger rival Vodacom exited the consumer ISP space in 2004 (it owned World Online for a period). After the disposal of the unit to Tiscali, the Italian firm then disposed of the base to MWEB. Even Internet Solutions’ purchase of most of MWEB last year excluded the consumer ISP unit. Consumer ISPs are tough businesses, remember.

So, what did MTN buy?

While the purchase price of R408 million for 50% plus one share (valuing Afrihost at ±R800 million) was disclosed in March 2015, additional data related to the transaction has been revealed in a subsequent presentation by MTN to investors.

The R408 million purchase price included R319 million of goodwill. That’s an awfully large amount of goodwill, but how many assets could an ISP really have besides the implied value of its customer base?

The presentation also discloses that Afrihost has 200 000 customers. This is the first time this number has been made public. By way of context, Telkom has 574 761 ‘internet all access subscribers’. These are not lines, but customers who use Telkom as their ISP (i.e. they buy bandwidth from Telkom)1. MWEB does not publish numbers, but the most recently available (reliable) figure for subscribers (from 2010) was 320 000. Well-placed sources in the market suggest that number is lower nowadays.

So, MTN now owns half of the country’s third- or second-largest (mainly consumer) ISP.

In the first six months of 2015, MTN reported revenue from Afrihost of R272 million. Double that for the full year and you get to a revenue run-rate of R550 million. That’s a big number for an ISP which started in CEO Gian Visser’s house. Even at low, single-digit margins, its a tidy business.

Using the number above, it’s easy to calculate that average revenue per user (ARPU) at Afrihost is R226 per month. Mobile operators love looking at the world through the lens of ARPU. By comparison, in the first quarter of 2015, ARPU of postpaid (contract) MTN customers in SA was R159.52 (per month). While the Afrihost numbers are skewed, likely significantly, by DSL line rental revenue that is effectively paid straight through to Telkom, it’s still an interesting comparison.

In the greater scheme of things at MTN, however, Afrihost is tiny. It’s 4.8% of the South African business’s data revenue (R272 million of R5.677 billion). But, that comparison is skewed by the nearly R4 billion in H1 mobile data revenue. When you consider Afrihost within the context of MTN’s ISP revenue (primarily from its enterprise business unit which services corporates and SMEs), the R272 million number becomes meaningful.

Its (existing) ISP revenue has been on the decline for a while now. In H1 2013, revenue was R604 million, last year’s H1 number was R586 million (but nearly two months of Afrihost revenue was included in this number). This year, ISP revenue was R462 million for the first-half. That’s a drop of practically a quarter inside two years (Afrihost excluded, of course).

In fact, without Afrihost, the 26.6% increase in data revenue across its South African business (mobile data included) in the first six months would’ve been closer to 20%. Was the deal (partly?) to buy growth?

At the time, MTN said the “transaction is aligned to the group’s strategy of optimising its operating model” (whatever that means).

It also waxed lyrically about how the “acquisition will add scale to MTN South Africa’s online ICT service offering, which is focused on the consumer and SME market. MTN South Africa expects to leverage off Afrihost’s strong customer service, value proposition and agility, thereby boosting MTN South Africa’s presence in the SME, Corporate/Consumer and Connected Home segments. MTN South Africa will in addition be able to supply Afrihost with products for its existing customer base and vice versa.”

Standard, MBA textbook stuff.
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More.
 
elvis_presley said:
Yeah - look at the images.

dev team office - empty (don't blame them, horrible cramped desks)
boardroom - empty
work area - 3 people
server admin - empty
brand team area - empty
management office - empty
entertainment area - people
gym - people

Where's the peeps?
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In the basement offices that get no light.
 
Electric said:
Axxess last week, Afrihost this week.
Are they done competing with their products so now they must compete with offices?
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Its paid article placement to deflect all attention from their p1sspoor products
 
Sonic2k said:
Its paid article placement to deflect all attention from their p1sspoor products
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I can't wait to see OpenWeb's offices next week.

It seems all the major MyBB sponsors are getting their turn one by one.
 
cozinsky said:
Another useless post from Sonic2k. I told you before that if you can't contribute something meaningful then hush. This is the last time I am admonishing you.
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His post is more poignant than yours. Ironic eh?
 
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