Shares in media group Naspers jumped 1,21% or 55 cents to R46,05 by midday on Monday following subsidiary M-Web’s successful R320-million successful bid to buy internet service provider (ISP) Tiscali South Africa on Friday.
M-Web’s subscriber base has been stagnant over the past three years (250Â 000 in 2001 compared with 242Â 000 at present).
The combined business will have a market share of less than 20% with much of the future net growth expected to come from broadband connections, where Telkom is leading the market. Telkom bid R400-million for the business.
The sale of Tiscali drew a lot of interest from ISP industry players and initially 15 companies and parties expressed interest in buying the operation, reported ITWeb.
The agreed price for 100% of the share capital of Tiscali is R320-million to be paid in cash upon closing, said the technology website.
The transaction is subject to the approval of the South African competition authority.
Kim Reid, CEO of M-Web, said “this consolidation will allow us to save costs by sharing infrastructure across a larger subscriber base. Scale is important and South Africa is a small but competitive market, where it has been tough to break even.”
“From a Tiscali SA perspective I am satisfied with the conclusion of the sale process and it is now simply a matter of waiting for the completion of the deal. Until then it is business as usual,” Diego Massida, managing director of Tiscali SA, was quoted as saying.
“As far as our clients are concerned, I do believe that this is the best outcome. The buyer is a solid and established ISP in SA and will be able to continue delivering service at the standard our clients are accustomed to.”