Dimension Data makes a bid for Access Kenya

Dimension Data South Africa, a subsidiary of Japanese telco, NTT Docomo, has made a bid for Access Kenya, a Kenyan ISP listed on the Nairobi Stock Exchange. Details here (via Reuters). This is interesting for a few reasons

Access Kenya has been struggling

Safaricom has been growing their corporate data offering (after their purchase of Onecom) and have systematically gone after Access Kenya’s key market (the corporate data market). The writing was on the wall for Access Kenya (and perhaps other ISP’s) after the Kenya Bankers Association gave the interconnection contract for the cheque truncation system to Safaricom (more here).

Best Exits in EA are still through M&A’s

There has been high activity in the M&A space in East Africa, but almost no listings with only two IPO’s so far (Access Kenya & Safaricom). If the DD/AK deal goes through, we will be down to one listed tech company (Safaricom has a huge data services business) on the Nairobi Stock Exchange.

  • Internet Solutions Kenya was an aquisition of Interconnect Kenya (link here).
  • Internet Solutions itself is an acquisition by Dimension Data South Africa.
  • Dimension Data got it’s foothold in East Africa by buying ICL East Africa (then owned by Naushad MeraliĀ Read more).
  • Dimension Data Group itself was eventually bought out by NTT Docomo.
  • Copy Cat got into Tanzania by buying BMTL.

Revenue is still in System Integration & Infrastructure

The system integration sector does not get too much praise in Kenya, but there is quite an amount of money to be made in that space along with traditional IT infrastructure.

  • Zuku has been able to raise a further 57.5 M USD (more here).
  • Safaricom is currently rolling out it’s fiber network (the Safaricom Digital City project has a budget of 10B KES more here) and has had it’s data revenues grow to 4B KES (over the first half of FY2013)
  • Even with all the issues plaguing it, KDN was able to find a suitor in Liquid Telecom.
  • In the system integration space, you have Copy Cat Limited which closed last fiscal with revenues hovering around 65M USD and they have a target of 100M USD in FY2013 (more here), Seven Seas Technologies now rolling out in Zambia, Ghana and Nigeria.

Interesting times

Dimension Data is not yet out of the woods. Whilst they are offering a significant premium on Access Kenya’s trading price as of Friday the 3rd of May 2013, there may be other offers for Access Kenya. Whatever the outcome, it will be interesting to watch (and possibly lucrative for current Access Kenya shareholders).