Is MTN hot for MWeb?

MTN has moved swiftly to partner with MWeb, the internet service provider (ISP) that has been put up for sale by its parent company, Naspers. Could it be that MTN is positioning itself to acquire MWeb?

It’s hard not to imagine this. The cellphone server announced last week that MWeb will sell its broadband data packages.

MTN says data is MWeb’s core business while voice packages have traditionally been MTN’s core business. MTN says it has sold data virtually by default in the past.

MWeb, the first ISP to be signed by MTN to resell its products, is one of the biggest ISPs in the country. It focuses on the consumer and corporate markets, including small businesses.

Naspers plans to auction MWeb. MTN’s rival, Vodacom, has also expressed an interest in the company, although it has not made an offer yet. Both MTN and Vodacom are ramping up investments in their data businesses, as the voice market is reaching saturation in the country.

The two firms are looking for a quick entry into the data service corporate market through the acquisition of an already established ISP that won’t divert their attention from the big picture of building their respective networks.

MTN is reported to have been shortlisted to buy Verizon Business South Africa. Vodacom has a stake in iBurst, which recently launched its Wimax services. Vodacom has also opened a new division, called Vodacom Business, which will cater for the data needs of the corporate market.

MTN’s partnership with MWeb is likely to put it in a strong position when the bidding process begins.

Vodacom’s bid could be hampered by its shareholding. South Africa’s biggest cellphone server has already indicated that its 50 percent ownership by Telkom, the country’s biggest fixed-line operator, made the pursuit of takeovers difficult, as they could be blocked by the competition authorities.

Market speculation is that MWeb might cost up to R2 billion.

MTN-MWEB – give your views

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Is MTN hot for MWeb?