Since reclaiming ownership from MTN in 2016, Afrihost, a leading South African ISP, has flourished. Originating from a humble room, it now thrives in a Sandton campus, employing hundreds. Initially a web host, it revolutionized the market with affordable services. Despite setbacks, including a brief ownership stint by MTN, Afrihost’s resilience paid off. With strategic acquisitions and a focus on customer support, it reclaimed the top ISP spot, now boasting a valuation over R2.5 billion.
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By Jan Vermeulen
Afrihost has seen tremendous success since its founders bought the company back from MTN in 2016.
Launched from a room in CEO Gian Visser’s mother’s home 25 years ago, Afrihost now occupies an entire campus in Sandton and employs hundreds of people.
It is one of South Africa’s largest independent Internet service providers and a household name in the broadband and hosting market.
However, its journey to the top hasn’t been smooth sailing.
Founded in 1999 by three school friends — Gian Visser, Brendan Armstrong, and Peter Meintjes — Afrihost made a name for itself in South Africa’s web hosting space before entering the broadband market.
In the late nineties, hosting a website was prohibitively expensive. Companies like Mweb and Internet Solutions (now NTT Data) charged R550 per month for a basic hosting package.
This inspired the three friends to offer much cheaper web hosting services. They launched a domain and web hosting package for only R150 per month.
Offering a competing service at a heavily discounted rate helped to popularise web hosting in South Africa — a strategy they would use to great effect many years later to enter the broadband market.
Throughout the early 2000s, Afrihost showed strong growth and became one of the biggest players in the retail hosting market.
Internet Solutions executive Greg Payne saw the company’s potential and resigned from his corporate job to join Afrihost as a director in 2008.
Payne’s experience helped to formalise the company structure and positioned it for rapid growth.
This began in 2009 when Afrihost entered South Africa’s hyper-competitive DSL service provider market.
Its first product offered DSL data at R55 per gigabyte — between R5 and R15 cheaper than other players in the space.
Unfortunately, this wasn’t enough to attract many signups.
At an informal strategy meeting, the team decided to use their advertising budget to subsidise the product and re-enter the market at R29 per GB.
For six months, Afrihost was every South African broadband consumer’s hero.
They signed up thousands of customers within weeks and quickly became one of the largest ADSL service providers in South Africa.
However, another massive disruption shook the market in March 2010 when Mweb launched uncapped DSL for between R349 and R899 per month (excluding Telkom phone line rental).
Now, Mweb has every consumer’s hero and every rival ISP’s worst nightmare.
But Afrihost’s founders are not the type to give up a good fight. They quickly found a way to offer their own uncapped packages.
They more than held their own in a fiercely competitive market — they thrived.
The next four years were a period of immense success and growth for Afrihost.
It won the coveted MyBroadband ISP of the Year Award every year from 2011 to 2014.
Afrihost also acquired a controlling stake in Axxess, further extending its reach in the ISP market.
The deal saw former Internet Solutions CEO Angus MacRobert become an Afrihost shareholder and director.
MacRobert brought a wealth of deal-making experience to the company and further cemented the team.
His established relationships with many South African business executives would serve Afrihost well in the following years.
This success caught the attention of big telecommunication players, among them MTN.
At the time, MTN did not have a strong presence in the residential and small business ISP market, and Afrihost could fill this gap.
Afrihost was also a wholesale customer of MTN’s, so a deal made perfect sense for both parties.
In 2014, MTN bought 50% plus one share of the company for R408 million.
This was the beginning of a tumultuous two years for Afrihost.
While the deal made instant millionaires of the Afrihost directors, it came at a tremendous cost.
Afrihost’s management suddenly had to deal with laborious corporate processes, and all big decisions had to be approved by a board.
The once agile and innovative company was a thing of the past. Afrihost’s product development ground to a halt.
After two years of slow product development and declining service levels, Afrihost’s directors made the call to buy back MTN’s stake in the company.
MTN agreed, and in 2016, Afrihost’s directors bought their company back for R325 million.
The transaction brought in new shareholders and saw founder Peter Meintjes leave the company to start a new life in the United States.
One of these new shareholders was former Internet Solutions executive Dean Suchard. He became Afrihost’s financial director, bringing valuable financial, legal, and commercial skills to the business.
The management buyback injected Afrihost with newfound energy.
They were back to being cowboys, coming up with product ideas on Thursday night and launching them by Wednesday the following week.
They also invested heavily in their customer support and backend systems.
Unfortunately, the damage done during the MTN years could not be fixed overnight.
Afrihost had lost substantial ground to its competitors and had to find new ways to be seen as South Africa’s broadband consumer champion once again.
In time, Afrihost stopped using MTN as its wholesale provider for DSL.
However, it maintained a good relationship with MTN and continued offering cellular services. It also launched LTE broadband services.
Afrihost also began offering services on a wide range of fibre networks, like Vumatel, MetroFibre, Frogfoot, and Telkom’s Openserve.
It now supports an incredible number of open-access fibre network operators — from massive to tiny.
This product and customer support strategy worked. In 2017, Afrihost ranked eleventh in the South African ISP rankings. By the end of 2022, it had climbed back to first place.
It also bought MyBroadband ISP of the Year Award winner Cool Ideas in 2021 and Home Connect in 2023.
That was also the year Afrihost regained its throne, winning the 2023 MyBroadband ISP of the Year award and defending its title in 2024.
Between its operations and its investments in Axxess and Cool Ideas, Afrihost owns the three top Internet service providers in South Africa.
As a result, Afrihost’s valuation has increased to over R2.5 billion, which means the company is now worth much more than when the founders bought it back from MTN eight years ago.
Read also:
- DStv price hike: 11 streaming services cheaper than a Premium decoder subscription
- Visser personally lets his clients know that Afrihost will be joining MTN
- South Africa’s affordable web options: How much it costs to set up a website
This article was first published by MyBroadband and is republished with permission
