We have received information that local Internet Access Provider Dandemutande, the company behind the uMAX service, will be merging with two internet service providers, iWayAfrica and AfricaOnline.
This move comes as the entities seek to establish a competitive advantage in a competitive operating environment that has been very brutal on every operator.
Yesterday we wrote about the financial performance of Dandemutande, which is a subsidiary of Masawara Holdings. Currently, Masawara owns 50% of Dandemutande and 15.03% of iWayAfrica Zimbabwe. Africa Online, the third part of this merger is owned by Gondwana International Networks, the African service provider that has a stake in iWayAfrica.
In light of this ownership structure, this merger brings together iWayAfrica Zimbabwe and Dandemutande that were operating as competing brands under one single flagship. It makes sense considering how competitive the current internet service space already.
Despite a 16% increase in revenue and spirited efforts at clawing its way back from a $2.1 million loss in the previous year, Dandemutande recorded a loss of $1,2 million in the most recent results.
While a combination of these forces won’t immediately dismiss the challenges that Dandemutande is facing in the environment, it is expected to offer some advantage and leverage as this becomes a provider of more services.
According to Michele Scanlon, the CEO of Dandemutande, although the merger is yet to be finalised, there has been work going on in the background to facilitate a smooth process. Regarding the losses that Dandemutande has been experiencing, she attributed this to the huge investments that the IAP had ploughed into the business, something characteristic of telecoms investments.
You can read the full statement from Dandemutande below.
Dandemutande announces merger with iWayAfrica and AfricaOnline
Dandemutande Investments (Private) Limited (“Dandemutande”), a licensed Internet Access Provider operating as Utande and uMAX, today announced that it has entered into agreements with iWayAfrica Zimbabwe (Private) Limited and Africa Online (Private) Limited, two of Zimbabwe’s leading Internet Service Providers, to acquire specified assets and liabilities from these businesses, in exchange for shares in Dandemutande.
iWayAfrica and Africa Online are both owned by Gondwana International Networks, a pan-African Telecommunications and ICT service provider based in South Africa. Established in 2003, Gondwana International Networks has a core operational focus on the design and implementation of broadband access networks and maintains a presence in 44 countries across Africa.
Under the terms of the transaction, the existing Dandemutande shareholders will own 51% of the enlarged company and Gondwana International Networks will own 49%.
Mr. Olatunde Akerele, Chairman of Dandemutande commented that “The merger reflects both parties commitment to drive sustainable growth by creating Zimbabwe’s leading Internet Access and Service Provider. Together Dandemutande, iWayAfrica and Africa Online have an unparalleled 57 years of operational experience in Zimbabwe. We will leverage off this going forward”.
The new combined entity will offer a wider portfolio of services across different technology platforms including fibre, satellite and wireless thereby meeting customer requirements for services beyond traditional connectivity. Managed services, cloud services from its carrier neutral data centre, VoIP and rural branch connectivity will be offered under a single service provider umbrella.
Whilst the boards of both companies have approved the business combination, the transaction remains subject to regulatory approval. It is expected to close in the second quarter of 2015.