Afrihost is one of South Africa’s largest independent Internet service providers and is a household name in the broadband and hosting market.
With high-end offices in Sandton and a valuation of R2.5 billion, it is easy to think it was started with a lot of funding and the backing of a large corporate. This was not the case.
Afrihost was founded in 1999 by three friends – Gian Visser, Brendan Armstrong, and Peter Meintjes.
They went to the same school and maintained a close relationship during their university years.
The trio also shared a passion for technology and the Internet and started to play around with Linux web hosting services in the late nineties.
Their first steps towards forming Afrihost began in 1997 when Armstrong told Visser about domain names, which he described as unique addresses on the Internet.
They clubbed their money together and registered 20 generic “.co.za” domain names with the aim of selling them at a profit in future.
At the same time, Armstrong set up a Linux hosting box and hosted a free bed-and-breakfast website which Visser had designed after reading the book “Frontpage in 24 Hours”.
In the late nineties, hosting a website was prohibitively expensive for most people, with companies like MWEB and Internet Solutions charging R550 per month for a basic hosting package.
This inspired the three friends to offer their own web hosting services at a much cheaper rate, and they launched a domain and web hosting package which cost only R150 per month.
Offering a competing service at a heavily-discounted rate helped to popularize web hosting in South Africa, and they would use the same strategy many years later to enter the broadband market.
During these formative years, Visser, Armstrong, and Meintjes had started their own independent technology companies. In 1999 they decided to join forces, and the Afrihost we know today was born.
The company’s first office was a room in Visser’s mother’s home, and the name Afrihost was selected.
So, why the name Afrihost?
According to Visser, it was chosen because it sounded like the title of an established and professional company. It was that simple.
In the early 2000s, the company showed strong growth and became one of the biggest players in the retail hosting market.
Internet Solutions executive Greg Payne saw the company’s potential and resigned from his corporate job to join Afrihost as a director in 2008.
Payne’s experience helped to formalize the company structure and position it for rapid growth.
Armed with a strengthened management team and new organisational structure, Afrihost was ready to expand beyond web hosting and reach the mass-market.
They achieved this by venturing into the Internet connectivity market in 2009 with a ground-breaking ADSL product.
Reusing their discounted-price strategy, Afrihost started to sell ADSL data at R29 per gigabyte at a time when their competitors were charging between R50 and R80 per gigabyte.
It was an instant hit. They signed up thousands of customers within weeks and quickly became one of the largest ADSL service providers in South Africa.
Two years later they extended their reach in the ISP market even further by acquiring a controlling stake in Axxess.
This deal saw former Internet Solutions CEO Angus MacRobert become an Afrihost shareholder and director.
MacRobert brought a wealth of deal-making experience to the company and further cemented the team.
His established relationships with many South African business executives would serve Afrihost well in the years to come.
Afrihost’s entry into the ADSL market was a big turning point for the company, which took it from being a R14-million hosting company in 2009 to a fully-fledged Internet service provider worth R400 million in 2013.
During this period, Afrihost dominated the ADSL market and won the coveted MyBroadband ISP of the Year award four years in a row.
Afrihost CEO Gian Visser also won numerous awards in his personal capacity, including MyBroadband’s ICT person of the year and the IT personality of the year.
This success caught the attention of big telecommunication players, which ultimately led to a turbulent two-year period for the company.
Mobile giant MTN was one of the big companies eyeing Afrihost and they wanted in on their success.
At the time, MTN did not have a strong presence in the residential and small business ISP market and Afrihost would be able to fill this gap.
Afrihost was also a wholesale client of MTN, so the deal made perfect sense for both parties.
In 2014, MTN bought a controlling stake of 50% plus 1 share in Afrihost for R408 million.
While the deal made instant millionaires of the Afrihost directors, it came at a tremendous cost.
Afrihost’s management suddenly had to deal with laborious corporate processes and all big decisions had to be approved by a board.
The once nimble and innovative company was a thing of the past and Afrihost’s product development ground to a halt.
After two years of slow product development and declining service levels, Afrihost’s directors made the call to buy back MTN’s stake in the company.
MTN agreed, and in 2016 Afrihost’s directors bought back the 50% stake for R325 million.
The transaction brought new shareholders on board and saw founder Peter Meintjes leave the company to start a new life in the United States.
One of these new shareholders was former Internet Solutions executive Dean Suchard, who became Afrihost’s financial director and brought valuable financial, legal, and commercial skills to the business.
There was newfound energy at Afrihost and they once again had the ability to make decisions quickly and launch products within a matter of days.
Unfortunately, the damage done to the company during the MTN years could not be fixed overnight.
Afrihost had lost substantial ground to its competitors and they had to find new ways to once again be seen as South Africa’s consumer champion.
The management team decided to accelerate their product development cycle and launched numerous new broadband services in quick succession. This included their Pure Fibre and Pure LTE products.
They also improved their customer support and backend systems to ensure they were on par with the top players in the market.
The strategy worked. Afrihost climbed from eleventh in the South African ISP rankings in 2017 to second in October 2020.
Afrihost’s valuation also increased to R2.5 billion, which means the company is now worth far more than when they bought it back from MTN.
There is no doubt that Afrihost changed the South African broadband market for the better, first by dropping the price of capped ADSL and later through innovative fibre and mobile products.
Afrihost is now a household name in the broadband market and the preferred ISP for thousands of South Africans.