Nigeria’s Leading Web Host, Web4Africa Ltd Acquires 100% Stake in Nairahost

The news broke in the early hours of Sunday, December 5th that a major acquisition in the web industry had just taken place.

Web4Africa Ltd, a leading web hosting company headquartered in Accra, Ghana has just acquired 100% control over Nairahost, a top web hosting firm based in Lagos, Nigeria at an undisclosed fee.

According to the official press release,

The acquisition boosts Web4Africa’s current client base of over 8,400 to about 11,500 after an expected overlap of clients has been considered. It also pushes Web4Africa’s domain portfolio to well over 8,000 and number of domains hosted to well over 4,000.

Market Share

This acquisition not only enlarges Web4Africa’s market share, but also promises “lower pricing and a larger choice of domain extensions to Nairahost customers as well as a world-class technical support for their web hosting services.”

Web4Africa claims to have about 30% of the web hosting market share in Nigeria in terms of customer base.

According to Mr. Oluniyi Ajao, MD of Web4Africa, the web hosting company has yearly revenues in the excess of N20 million (approximately $132,000).

With this acquisition, Web4Africa’s revenues in 2011 could double as their client base is expected to soar in the coming months.

Nairahost would be managed as an independent entity before fully merging the two operations in early 2011.

Market Valuation

Though it is difficult to ascertain how much Nairahost was worth before the acquisition, we can assume that the web hosting company would be valued at about N10 million given its client base (about 3,300) and estimated revenues before acquisition.

If these figures are correct, Web4Africa may have acquired Nairahost within the range of N15 million and N20 million (between $90,000 and $130,000).

In 2009, Nairahost claimed to have received external funding of $500, 000 (about N85 million at that time), and appointed a new CEO whose role was supposedly to oversee the company’s goals and visions.

My guess at the time was that Adeolu Akinyemi, the ex-CEO of Nairahost may have invested in the company for a stake, which gave him the top position.

Nairahost was founded in 2004 by Kayode Muyibi and Emmanuel Oluwatosin.

Disgruntled Customers

Before then, the owners of Nairahost had faced a lot of problems running the company smoothly and managing ‘disgruntled customers’.

I asked Mr. Ajao how Web4Africa plans to handle Nairahost’s ‘disgruntled customers’ as a result of this acquisition and what the company would do to retain the customer’s loyalty.

His response was that, “Web4Africa’s growth is not by accident. It is through a consistent and high quality service offered. Nairahost clients would experience the exciting features that make Web4Africa a formidable force in the web hosting industry. We have plans and strategies to win back their confidence.”

Competition

With lots of domain names (.com, .ng, etc) being registered on a monthly basis in Nigeria, there’s stiff competition within the web hosting industry. Major players include Syskay, Nairahost, Alireta, McReal and Abimco. In November 2008, Nairahost was the leading web hosting company in Nigeria.

Reacting to the recent acquisition, Ahmad Mukoshy, CEO of Aimtech, a growing web hosting company based in Sokoto, Nigeria said,

“This is big, two Nigerian giants as one. The industry will experience a really huge competition. However, Aimtech has been trying to compete and will continue to do so by preparing well for the upcoming huge blow.”

When asked how Aimtech will compete in this difficult space, he said, “Aimtech will stand and focus on per customer base”.

Aimtech started operations in 2007, years after Web4Africa (started in 2002) and Nairahost (started in 2004) have been in existence. So far, the company is doing well with about 600 customers (and over 400 active websites and domains), which signifies over 25% increase in client base compared to 2009.

Looking into the future, Aimtech hopes to sign a huge investment in Q1 2011.

Final Thoughts

The web hosting industry in Nigeria is not as profitable and/or lucrative as people may think.

In fact, Mr. Yomi Adegboye, CEO of Alireta, one of the leading web hosting companies in Nigeria once said that it’s been difficult to reach the break-even point in the market, as people prefer web hosts that offer lower pricing compared to what his company offers.

Again, even though most of the web hosting companies in Nigeria offer interesting features and packages, none of them offer unlimited disk space and bandwidth like the world’s most popular web hosting companies.

My guess is that with enough broadband access to cater for the over 44 million internet users in Nigeria, we would soon start to witness more competitive web hosting offers that may include unlimited disk space and bandwidth.

Perhaps Web4Africa could pioneer this in the coming months.

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