Afrihost wants to buy back shares from MTN: source

Afrihost’s directors have made an offer to MTN to buy back MTN’s 50% stake in Afrihost.

A source told MyBroadband that discussions between Afrihost and MTN regarding Afrihost’s offer to buy back its shares are at an advanced stage.

In June 2014, MTN announced it was buying 50% +1 of Afrihost’s shares (for R408 million), with the Afrihost shareholders retaining the remaining shareholding.

Afrihost said the acquisition would give it more muscle to innovate and offer value to customers.

When the deal was approved by the competition authorities in November 2014, Afrihost said it would continue the “successful collaboration between the two companies in providing industry-leading DSL, mobile data, and web hosting services to clients”.

Since then, Afrihost has experienced significant problems using MTN’s ADSL network and was forced to build its own network to improve its DSL service levels.

Industry speculation also suggests that the red tape which comes with being part of MTN stifled innovation at Afrihost, and made launching new products challenging.

With Afrihost moving away from MTN’s DSL network – combined with challenges associated with the MTN shareholding – it is not surprising that Afrihost wants to buy its shares back.

Afrihost was asked about the share buy-back offer, but the company did not comment by the time of publication.

Nik Kershaw, MTN’s Group Executive for Investor Relations, said “MTN continues to evaluate all opportunities with respect to its business, and as is usual we don’t comment on market speculation”.

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