Back in 2014, MTN – South Africa’s second biggest mobile phone operator – shelled out R408 million to buy 50% (plus one share) of the internet service provider Afrihost. Everyone literally swept this deal under the carpet. By Gugu Lourie
Now, MTN is planning to dispose of its 50.02% shareholding in Afrihost. The company says this is in line with its strategy of focusing on core business and pursuing opportunities in relevant adjacent businesses.
MTN claims that evolving market circumstances have resulted in it reviewing its ownership in Afrihost. As a result, MTN has agreed to dispose of its shareholding to the executive management of Afrihost.
But while circumstances have changed, it doesn’t position MTN well in its diversification strategy as Afrihost was meant to add scale to the mobile phone operator’s online ICT service offering that is focused on the consumer and small and medium enterprise market.
MTN was also expecting to leverage off Afrihost’s strong customer service, value proposition and agility, thereby boosting MTN South Africa’s presence in the SME, Corporate/Consumer and Connected Home segments.
However, MTN’s decision to walk away from Afrihost is likely to hurt its growth strategy into adjacent markets through acquisitions and its local business that has been hard hit by tough competition from rivals.
That said, Mteto Nyati, MTN SA CEO, on Friday justified the company’s exiting its majority stake in Afrihost saying “the disposal will allow both parties to focus their attention on their core businesses”.
Nyati added that the deal is in line with MTN’s strategy of focusing on core business while exploring relevant adjacent growth opportunities. “The conclusion of this transaction will go a long way towards streamlining our operations” he said.
Gian Visser, Afrihost’s CEO, said the ISP have enjoyed a long and fruitful partnership with MTN over the years.
“We are grateful for everything they have done for us. MTN will remain a key supplier of ours, and we look forward to continue working with them for the years ahead.”
In line with the spirit of the agreement, MTN said it expects this development to have minimal impact on its customers.