Nigeria’s connectivity space has been experiencing some interesting changes in recent months. Currently, things are set to go into high gear with the acquisition of one of Africa’s biggest players.
US-based Internet connectivity giant, Equinix, is currently in talks to acquire Nigeria’s connectivity behemoth, MainOne for $320 million. The acquisition is expected to be finalised by Q2 2022.
Founded in 2010 by renowned entrepreneur, Funke Opeke, MainOne laid the first private submarine cable (7000 kilometres) in Africa connecting West Africa with Portugal in Europe. The company also boasts 1,200 kilometres of terrestrial fibre and it provides high-speed internet for up to 800 businesses in Lagos, Edo, and Ogun State, Nigeria.
The company also has a growing list of Tier 3 data facilities that are fully operational in Lagos, Accra, and Abidjan. These facilities provide access to key Internet exchanges that reduces latency when accessing the Internet.
For context, the Internet we use today in Africa comes from a complex network of communication devices that usually start with fibre optic cables laid across the ocean. For years, this was the domain of governments and public companies, but MainOne’s entry in 2010 changed the game.
The acquisition reportedly gives 64,000 gross square feet of space to Platform Equinix® (the company’s data centre arm), with 570,000 square feet of land for future expansions.
MainOne’s facilities reportedly generate approximately US$60M annualised (Q2’21LQA) revenue with a purchase multiple of approximately 14x EBITDA.
This move will provide MainOne access to Equinix’s infrastructure which includes 327 data centres across 27 countries.
According to a statement, the intended acquisition of MainOne will serve as an expansion strategy for Equinix into the African market. Subject to regulatory approvals and other closing conditions, the acquisition is expected to close by Q1 2022.
The transaction has an enterprise value of $320 million and it’s expected that both companies will fully integrate their infrastructure.
“The acquisition of MainOne will represent a critical point of entry for Platform Equinix into the expansive and rapidly growing African market. MainOne’s leading interconnection position and experienced management team represent critical assets in our aspirations to be the leading neutral provider of digital infrastructure in Africa,” says Charles Meyers.
According to Meyers, MainOne’s infrastructure and trusted connections would help extend the company’s reach in Africa.
According to the statement, CEO, Funke Opeke, and other top management staff will continue in their roles.
Opeke believes this acquisition would accelerate the company’s long term vision to grow digital infrastructure investments in Africa.
“With similar values and culture to what we have jointly built in twelve years, Equinix is the preferred partner for our growth journey. The MainOne team is excited about the partnership created through the acquisition, and we look forward to building our next chapter together.”
Equinix is a public trading company currently valued at $73 billion and its annual revenue in 2020 was about $5 billion. These figures make it one of the biggest players in the global connectivity space.
It is, perhaps, interesting to note that Equinix has been on a sort of acquisition spree in the last year.
In October 2020, it acquired 13 data centres in Canada, making it one of the leading data centre providers in the country.
In Q1 2021, it closed the acquisition of GPX India for $161 million, which provided it access to two world-class data centres and, of course, India’s huge market.
Publicly available information reveals that MainOne has raised over $240 million, and the company has been making significant investments in Africa’s digital ecosystem. All things considered, the acquisition’s $320 million might seem way below expectations.
Apparently, the wording of the press statements shows that this could be an accretive acquisition that helps Equinix boosts its earnings per share for its shareholders.
In accretive acquisitions, the price paid by the acquiring firm is usually lower than the expected boost it would receive from the acquisition.
This is, however, mere speculation, and we’ve reached out to MainOne to gain more clarity on the acquisition.