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M&A Interest Grows in South Africa's Internet Solutions

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South African network operators MTN and Vodacom are both believed to be interested in acquiring IT services and systems integration specialist Internet Solutions (IS), according to various media reports.

Internet Solutions, which provides connectivity, cloud, security and communications services to enterprise users in South Africa, is a unit of Dimension Data, the global systems integrator that is, in turn, part of the global empire of Japanese telecoms giant NTT. Dimension Data is believed to be keen to offload its operations in Africa, of which Internet Solutions is the main asset.

Other African businesses owned by Dimension Data include Agile, AlwaysOn, Britehouse Holdings, ContinuitySA, Internet Solutions Kenya (aka AccessKenya), VAST Networks, Xpedia

According to a Bloomberg report published by Business Tech, MTN is considering an offer that might be worth as much as US$600 million, while there is also a suggestion that a management buyout followed by a public listing in London might also be a possibility.

The market for cloud services is set to expand in South Africa in the coming years following the news that Microsoft plans to offer applications such as Microsoft Azure, Office 365 and Dynamics 365, from data centers in Johannesburg and Cape Town starting next year. (See Microsoft Plans Cloud Services Launch in Africa in 2018.)

That move in turn prompted Amazon Web Services to hint that it would follow suit. (See AWS Looks Set to Follow Microsoft With SA Data Center.)

MTN and Vodacom will not want to be left behind in the enterprise services sector, especially as incumbent operator Telkom is already making strides with its BCX business (formerly Telkom Business Connexion). (See Mobile, ICT Services Fuel Telkom's Growth.)

Ray Le Maistre, Follow me on TwitterVisit my LinkedIn profile, International Group Editor, Light Reading for Connecting Africa.

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