The Competition Commission has approved Webafrica’s proposed acquisition of Mweb, with conditions.
Mweb parent Dimension Data and Webafrica confirmed the deal last week without disclosing the value of the transaction.
In its ruling on the transaction, the Commission found it unlikely to result in substantial prevention or lessening of competition in relevant markets.
“To address public interest concerns, the acquiring firm shall adopt and implement an Employee Share Ownership Programme and an HDP transaction,” the Commission stated.
The Commission’s findings came earlier than expected. Webafrica chief commercial officer Greg Wright told MyBroadband they expected an answer by 1 November 2023.
Wright said the deal is being funded with their balance sheet, that Mweb will continue operating as an independent entity, and that they aren’t expecting any layoffs due to the deal.
Dimension Data said the transaction aligned with its strategy of focussing on core markets servicing its enterprise client base.
“We are continually refining our portfolio of services to ensure relevance to our clients,” said Dimension Data CEO Alan Turnley-Jones.
“Dimension Data is also on a journey to integrate with our global shareholder, NTT. The decision to sell Mweb will enable us to accelerate this journey and to focus on our core competencies, while leveraging NTT’s capability in platform delivered managed services.”
Webafrica CEO Sean Nourse (pictured), who was the CEO of Mweb between October 2017 and July 2020, told MyBroadband that he was excited about the deal.
“We’re ecstatic to bring onboard one of SA’s most loved brands and can’t wait to welcome their staff and customers into the Webafrica family,” Nourse said.
A well-placed source told MyBroadband in 2021 that Dimension Data was looking for a buyer for Mweb, with Standard Bank running the process.
Dimension Data subsequently confirmed the report, but in October 2021, it said it was no longer selling Mweb and appointed Manelisa Mavuso as managing director.
Dimension Data bought Mweb from Naspers in 2017 for around R130 million.
The price tag was surprisingly low relative to similar deals around that time.
In 2014, MTN bought 50% plus one share of Afrihost for R408 million, valuing the company at R916 million.
However, it must be noted that although Afrihost had far fewer broadband subscribers than Mweb, its valuation may have been higher due to its large hosting division.
Afrihost bought back its shares from MTN in 2016 for R325 million, which valued the company at R650 million.
Webafrica was also put up for sale in 2019 with the help of Standard Bank, with a price tag of around R300 million.
Its biggest asset was its 35,000 fibre customers, valued at around R5,000 per subscriber by most ISPs.
Overall, it had around 60,000 customers at the time, and industry players valued it at between R170 million and R220 million.
Although a deal did not happen for Webafrica, it indicates how much large telecom players were willing to pay for active fibre subscribers.