Mobile operator MTN is ditching its controlling stake in internet service provider (ISP) and mobile virtual network operator (MVNO) Afrihost. MTN bought the stake in 2014 for R408 million. Consumer ISPs are notoriously tough businesses with thin margins and a highly competitive landscape to contend with. Also, in its role as an MVNO (Afrihost Mobile launched in January), Afrihost essentially resells MTN products for less than its former parent does. That can’t have left the operator feeling very gruntled.
In a press release MTN put out this morning it says the move is “in line with its strategy of focusing on core business and pursuing opportunities in relevant adjacent businesses”. Which sounds like corporate speak for “whoops”.
The Competition Commission has to give its nod of approval, but given it means Afrihost will be independent again rather than consolidated with the enormous MTN it seem unlikely the move will meet resistance.
So, who’s picking up the shares? The executive management of Afrihost, according to the same release.
“We have enjoyed a long and fruitful partnership with MTN over the years and we are grateful for everything they have done for us,” says Afrihost CEO, Gian Visser. “MTN will remain a key supplier of ours, and we look forward to continue working with them for the years ahead.”
What if, like some of the Stuff office you’ve ported your number to Afrihost? Happily, you (and we) should be unaffected. MTN says it expects this development “to have minimal impact” on customers. Phew.
“The conclusion of this transaction will go a long way towards streamlining our operations” says MTN CEO Mteto Nyati. “As MTN we would like to wish Afrihost well in their business.”
So, anyone wanna buy an ISP?