Internet Solutions and MWEB in possible merger/acquistion talks

It seems that internet giant Naspers may be in talks to merge its internet service provider, MWEB, with Dimension Data’s Internet Solutions reports TechCentral.

Referencing a well-placed industry source, the report says that “Dimension Data and Naspers have been engaged in talks about merging MWeb and Dimension Data division Internet Solutions (IS)”. The details of the deal are unclear with little to no information confirmed by the parties involved. Though TechCentral notes that DiData will hold 80% of the equity in the merged entity, leaving Naspers with just 20%.

Naspers has been wanting to get rid of MWEB for a while now. In June 2008 the emerging market media titan announced that the ISP would be auctioned off, so it could concentrate on developing its wireless broadband network while Naspers focuses on its media business. However the company called off the auction a few months later stating that:

“Given economic conditions globally and the contraction in credit markets, shareholders are also advised that Naspers has terminated the auction process for the disposal of MWeb SA.”

TechCentral notes that DiData has denied there being any basis for a merger and said it “is untrue that we are in talks to buy MWeb” calling it “market rumours” and “speculation”.

Internet Solutions provides connectivity solutions, communications solutions, cloud offerings as well as carrier services to a number of large and medium corporate enterprises. IS currently provides 80 percent of companies listed on the Johannesburg Stock Exchange and has a presence in other parts of Africa.

A merger or an acquisition of MWEB would make sense as it would help IS move into the consumer space and gain a sizable junk of the consumer market.

If the word on the street turns out to be true, it would add to DiData’s acquisitions following its purchase of East Africa’s AccessKenya Group earlier this year in a deal valued at R328-million.