Zweli Mokgata

Zweli Mokgata

MTN has taken an aggressive step forward in the local Internet service provider (ISP) industry with the acquisition of Verizon South Africa.

Tim Lowry, MTN South Africa managing director, said after the announcement yesterday: "The Business ISP market is dominated by Telkom (over 50 percent of total market share) and Internet Solutions. MTN has a small presence through MTN Network Solutions.

"The deal will go through a clearance procedure, and within three to four months, we'll be able to confirm that we've completed this transaction," Lowry said.

MTN has been developing service providers in a number of African operations including South Africa, Nigeria, Cameroon, Uganda and Rwanda.

"This acquisition will build scale in South Africa, taking our market share of the ISP industry up to between 10 and 12percent. Many of our clients are looking for Pan-African solutions, and this acquisition gives us a presence in Namibia, Botswana, Zambia and Kenya," he said.

Verizon has operations in more than 150 countries and provides wireless communication services to more than 67million people.

Lowry said there would be no job losses as a result of the merger and that the entire 140 strong staff would be absorbed by MTN.

Rajay Ambekar, an analyst from Cadiz Asset Management, said that although the acquisition was small compared to the overall size of the MTN Group, it was key to taking advantage of the expected growth of the Internet market locally as a result of developments to increase network capacity.

Verizon is a shareholder in the SAT3 undersea fibre optic network along the west coast of South Africa, along with 60 other undersea networks worldwide.

Ambekar said: "MTN is bulking up its size, and adding another building block in providing a complete suite of services."

MTN expects to begin its first offering under the combined relationship in March next year, provided that the Competition Commission approves the merger on time in November.