Webafrica is buying Mweb

Dimension Data has accepted an offer from Webafrica to acquire Mweb for an undisclosed amount, the companies have told MyBroadband.

Webafrica chief commercial officer Greg Wright said the deal is being funded with their balance sheet. They expect an answer from the Competition Commission on the proposed transaction by 1 November 2023.

Mweb will continue operating as an independent entity, and Wright said they aren’t expecting any layoffs due to the deal.

Dimension Data also declined to reveal the specific terms of the deal.

It said the transaction was in line 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.

Dimension Data said the deal would be good for consumers.

“The combined entity will be able to leverage economies of scale, which in turn unlocks cost savings and better value for consumers in the long run,” it stated.

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 are willing to pay for active fibre subscribers.

Now read: Webafrica introduces R999 cancellation fee — but promises cheapest fibre prices

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Webafrica is buying Mweb