Webafrica’s plans for Mweb

Five years ago, Webafrica was for sale and its shareholders ready to walk away from the business.

Fast forward to 2023 and the company has not been acquired but instead did the acquiring — buying Mweb and becoming one of the largest Internet service providers in South Africa.

This raises the question of whether Webafrica is still for sale and what the strategy was behind its acquisition.

One of the biggest hurdles Webafrica faced when it was seeking a buyer in 2019 was its asking price — R300 million.

While there was interest in buying the company from players like Afrihost and RSAWeb at the time, many ISPs valued Webafrica at between R170 million and R220 million.

This was because when it started looking for potential buyers, the company was losing money and had been struggling to turn a profit for a long time.

However, this changed in May 2019 when Webafrica migrated from Internet Solutions as its wholesale provider.

It switched to a more custom network in partnership with a number of parties, including Echo Service Provider, the same company Afrihost uses.

The move significantly reduced Webafrica’s network cost, which helped the company become profitable.

Although its profit was not even close to justifying a R300 million valuation, it showed that the company was on the right track and its shareholders stuck to their asking price.

Then, in 2020, Webafrica CEO Tim Wyatt-Gunning stepped down and handed the reins of the ISP to Internet Solutions veteran Sean Nourse.

Nourse had also served as Mweb CEO after Dimension Data acquired the business in 2017.

Sean Nourse, Webafrica CEO, Mweb CEO 2017–2020; 2023–

In January 2021, news emerged that Mweb had been put up for sale for an undisclosed amount.

Webafrica reached a deal to acquire Mweb from Dimension Data in 2023. The value of the transaction was not disclosed, though Webafrica said it used its balance sheet to fund it.

Nourse said the companies have a combined 500,000 customers and hope to reach a million by 2027.

“Mweb is the largest fibre-to-the-home Internet service provider in the market, and it accelerates our growth,” he said.

“It gives us the growth to continue to be successful and the scale and synergies to reinvest into the business.”

Nourse also said that previously serving as Mweb CEO was critical to the deal’s success.

“It gives out shareholders a lot of confidence. A lot of the Mweb staff are still there, and they know me and how I operate,” he said.

Nourse said deals between two organisations that were fierce competitors for 25 years typically don’t work because of the uncertainty among the workforce.

“Hopefully, I will be able to put that uncertainty to rest. Both organisations know me, and we work well together,” he said.

Since then, Mweb and Webafrica have merged their operations to benefit from the strengths of both teams. However, they continue to operate as independent brands.

“There is considerable brand equity in both brands,” Webafrica chief commercial officer Greg Wright recently told MyBroadband.

Regarding speculation about Webafrica’s strategy behind acquiring Mweb, whether it is still for sale, and who its current shareholders are, the company declined to comment.

“We are not allowed to comment on shareholder matters,” Webafrica said.