ARAB-AFRICAN AFFAIRS - Feb. 12 - Africa Online Buys Egypt's MenaNet.

The pan-African internet service provider (ISP) Africa Online acquires Egypt's MenaNet Communications for $8.7m, increasing its network to nine countries. (It is Africa's largest ISP outside South Africa, with the widest coverage, and the move into Egypt reflects an aggressive expansion strategy across the continent. MenaNet is Egypt's second largest ISP, with more than 7,300 dial-up subscribers. Analysts see Africa Online's ambitions as a positive force in a region suffering from a growing "digital divide". According to the International Telecommunications Union, Africa has only 36 internet users in 10,000 inhabitants, compared with 183 in Asia, 992 in Europe and 1,167 in the Americas. Only one in 100 Africans owns a personal computer and there are fewer than three internet hosts for every 10,000 people. Africa Online in 2000 announced a joint venture with UUNet in South Africa to create a 14-country African internet backbone, allowing it to shift its own focus from technical management to marketing. It has also launched a "clicks-and-bricks" alliance with Barclays Bank, and intends to develop web-based banking services and electronic payments systems.

Such growth had raised concerns that Africa Online was expanding too fast. But commentators were encouraged by UK-based African Lakes' decision last week to take control of the company. Ayisi Makatiani, the CEO, concedes his company is not yet profitable overall - but says that is due to the cost of its expansion activities. Africa Online has 33,000 dial-up subscribers and revenues of $1.3m a month, but sees the greatest potential in its "e-touch" centres. These are essentially cybercafes targeting Africans who cannot afford their own computers. Its 714 bureaus have attracted 26,000 active users in the first 15 months of operations. The company has recently introduced payment smart-cards for the network, and is expanding the franchise. While Egypt might appear to be outside his traditional sphere of operations, Makatiani says it, and the Middle East as a whole, offers many of the same challenges and opportunities as sub-Saharan Africa. "Egypt has 60m people, and fewer than 100,000 users", he says. "E-touch will allow us to reach many more people").