Webafrica sale – Here is how much money the company wants

Webafrica was put up for sale in 2019 with the help of Standard Bank, but to date, the company has not received an offer which it was willing to accept.

Webafrica, which was founded in 1997 by Matthew Tagg as a web hosting company, is one of South Africa’s largest Internet service providers (ISPs) with around 60,000 customers.

Its most valuable asset is its 35,000 fibre customers which have piqued the interest of many South African ISPs.

Its DSL and fixed-LTE customer base are seen as less valuable because of the high churn rate of LTE subscribers and the fact that DSL is being discontinued.

With all ISPs trying to rapidly grow their subscriber base to benefit from cost savings and economies of scale, most of South Africa’s large players were keen to make a deal with Webafrica.

There was, however, a big difference in the price which these ISPs were willing to pay and how much Webafrica is looking for.

Most of the ISPs valued Webafrica between R170 million and R220 million, but the company would not sell for anything less than R300 million.

Webafrica becoming profitable

When Webafrica started to look for potential buyers last year the company was losing money – it has been struggling to turn a profit for a long time.

This, however, changed after Webafrica migrated from Internet Solutions to its own infrastructure provider in partnership with a number of parties, including Echo Service Provider.

This move significantly reduced Webafrica’s network cost which helped the company to become profitable.

While this profit is not even close to justifying a valuation of R300 million, it shows that the company is on the right track.

This may be one of the biggest reasons why Webafrica CEO Tim Wyatt-Gunning is able to stick to his R300 million asking price and not entertain lower offers.

Focus remains on growing the company

Wyatt-Gunning previously told MyBroadband that Webafrica has not been sold and that “the owners of Webafrica remain the same in all aspects”.

All industry feedback points to the fact that this is still the case, and Wyatt-Gunning told MyBroadband this month that he has no comment on the company’s valuation or financial position.

“We continue to focus on the rapid exciting growth of our business,” he told MyBroadband last year when the sale became public knowledge.

Industry speculation suggests that there is still some interest in the ISP, but the selling price of R300 million remains a big hurdle.

Now read: Webafrica for sale

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Webafrica sale – Here is how much money the company wants