iBurst isn't for sale

ADSL South Africa (Broadband South Africa), 13 November 2006

The above stands if we accept Thami Mtshali's (CEO of iBurst) response on rumours that iBurst is for sale as the truth. Are 'predators' closing in on iBurst?

Mtshali's response: "An enquiry into the company's value should be interpreted within that context. There are no firm bids on the table from either SA or international companies. Even if that were the case, iBurst isn't for sale."

Why should any party be interested in the acquisition of iBurst?  Well, here's a few good reasons:

• 30 000 subscribers  - This is the number of subscribers that iBurst managed to sign up since its launch 18 months ago. One of iBurst's biggest competitors in the wireless broadband market, Sentech, only managed to sign up 8 000 subscribers at its peak. This makes iBurst's achievement astounding to say the least.

• Wireless license and strategic assets - For instance iBurst's license to access the WiMax spectrum adds a sought after component to its arsenal. Add on top of that iBurst's wireless infrastructure spread as far as Kimberley in the Northern Cape and you have a real jewel.

Which players might be possible 'predators'?

• Vodacom  - Why would Vodacom be interested in acquiring iBurst? Growth forms an essential part of Vodacom's strategy. Competition is however becoming fiercer by the day in the cellular market. This means that Vodacom needs to tap into a new market like the wireless broadband market with its double digit growth figures.
  
  iBurst fits the glove perfectly. While it's true that the Competition Commission can potentially stop Vodacom from acquiring iBurst the tables are not totally turned against such endeavour. "Vodacom's bid for iBurst could be pushed through with perhaps some stringent conditions attached" (Arthur Goldstuck, Telecoms Analyst).
  
  One can only hope that iBurst never falls into the hands of Vodacom. Falling into the hands of Vodacom will mean falling into the hands of Telkom . It will be a nightmare coming true for many broadband users in South Africa if this happens.

• Altech  (listed telecoms and technology group) - CEO of Altech, Craig Venter, confirmed that Altech is hunting for wireless broadband opportunities although he declined to comment on a possible acquisition of iBurst after a failed bid last year. "In December last year, Blue Label Investments outbid Altech to acquire a 40% stake in iBurst. We bid for a 51% controlling stake, but iBurst's management settled for Blue Label Investment's 40% bid - and that's news in the public domain. I can't say anything further than what the public knows. But I can confirm that we're still on the hunt for opportunities" (Craig Venter).
  
  Altech is with R1.3bn cash in hand in a very favourable financial position to make an acquisition.
  
  Vodacom and Altech are rumoured to be locked in a battle for iBurst. One can only hope that Altech will emerge as the winner in such instance to prevent Telkom from gaining control over iBurst.

• Verizon Business SA - Potential bidder.

• Internet Solutions - Potential bidder.

• Datacentrix  - Prefers organic to acquisitive growth. In other words will not be bidding on iBurst.

• MWeb  - Chances of MWeb trying to acquire iBurst remains slim. "Its parent company Naspers has the cash to back MWeb's bid if it were in the running but MWeb typically doesn't roll out its own backbone. It rather piggybacks on existing infrastructure and therefore it's out of the picture" (Arthur Goldstuck).

• Business Connection - According to Goldstuck if it was not that Business Connection is on the verge of a Telkom buy out it would have been in the running for iBurst.

If any of the rumours in the market are true we can only hope that no players under the control of Telkom, directly or indirectly, will come out as the winners.