Why Afrihost bought itself back from MTN
Afrihost’s directors bought the company back from MTN because they wanted the ability to make decisions and develop and launch products within a matter of days.
“At heart, we are dreamers and risk-taking entrepreneurs,” Afrihost CEO Gian Visser said at the 2016 MyBroadband Conference.
“We like pushing the edges and leaping off cliffs and that, in all honestly, often doesn’t go well with big, structured corporates.”
Since buying the company back from MTN, the main difference has been the speed of decision making.
“For example, for our R1 for 250MB mobile data promotion: on Thursday night we had the idea and the directors were talking about it,” said Visser.
The next morning, they spoke to their development and branding teams, and by the middle of the following week, the deal was live and Afrihost was selling the product.
“There’s a saying we use a lot at Afrihost: If you’re gonna be a cowboy, you’ve gotta know how to ride,” said Visser.
“We are cowboys, there’s no questions about it, and we’re planning to do a lot riding in the next few years.”
The MTN-Afrihost deal
MTN bought a controlling stake in Afrihost (50% + 1 share) in 2014 for R408 million.
It sold back the investment for R325 million, which means MTN made a loss on the transaction.
“Based on an agreement concluded by the Group to sell its 50.02% investment in Afrihost for [R325] million, a goodwill impairment loss of R202 million was recognised at 30 June 2016,” said MTN.
MTN said this goodwill impairment loss was “recognised on the remeasurement of the assets to fair value less cost to sell in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations”.
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