Equinix, a California-based provider of internet and data center services, announced today (Dec. 7) that it will buy MainOne, the first private company to land a submarine cable company in west Africa, in a $320 million deal that highlights Africa’s growing internet-driven economy.
Based in Nigeria, MainOne started laying its 7,000 km fibre optic cable network that stretches from Portugal to Nigeria in 2008, launching it two years later. In the decade since, the company has grown from a startup providing internet to Nigerian businesses, homes, internet service providers, and large telecom operators like MTN and Airtel, to a pan-African company covering 10 countries.
Key MainOne assets that will now belong to Equinix as a result of the deal include three operational data centers and one under construction expected to open in the first quarter of 2022. One other asset is Funke Opeke, MainOne’s founder and CEO, who will continue in her role.
MainOne’s exit validates Opeke’s big risk
Opeke returned to Nigeria in 2005 after a twenty-year telecoms career that saw her become an executive at Verizon. But at the time of her return, the internet was nascent and expensive in Nigeria with huge infrastructure costs for service providers. After a plan to privatize Nigeria’s now defunct state telephone company (NITEL) fell through, Opeke turned her attention to the difficult challenge of landing west Africa’s first private submarine cable.
As she tells it, there was initial skepticism even from one of those who would later become a MainOne’s founding shareholders. But the company sparked to life after raising $240 million from a number of Nigerian banks, the Africa Finance Corporation, and the Africa Development Bank (AfDB.)
MainOne has since been the internet service provider for 800 business-to-business companies, and has especially partnered with organisations like Co-creation Hub that have been integral to Nigeria’s thriving tech scene. At Decagon, a Lagos-based software engineering training institute, MainOne provides the internet service that ensures students have constant up-time.
“Funke Opeke took the risk to build the infrastructure upon which the rest of the ecosystem sits,” says Ola Brown, an investor and founder of medical emergency service Flying Doctors Nigeria. “Without the high speed internet that MainOne helped provide, startup growth would be limited.”
Internet penetration in Nigeria remains under 40% but it has grown thanks to infrastructure by companies like MainOne helping to lower costs for operators and users. The proportion of individuals using the internet in Nigeria has grown from under 10% to more than 33% in the decade leading to 2019, according to the World Bank.
Another big deal that should attract more investors to Africa
Equinix’s interest in MainOne is validated by other mega internet projects happening in Africa. Facebook and Google have launched ambitious subsea cable plans, while Elon Musk’s SpaceX-owned Starlink wants to beam internet access to every part of the world using satellites.
It portends a brighter future for internet adoption in Africa, to accelerate the spread of internet-based services like internet banking, ecommerce, and even an exciting rise of independent digitally-native creators on TikTok and other platforms.
Last year, Paystack’s acquisition by Stripe was the landmark M&A deal in African tech. Though MainOne has sold for more money, it was founded at least five years before Paystack and raised much more from investors than the $9.3 million Paystack did. Most reactions to the deal praise Opeke—who has played a leading role in shaping Nigeria’s national broadband plan—for running and selling a very profitable company, while some have speculated whether Equinix’s offer price undervalues the company.
But for Brown, MainOne’s sale is another indicator of exponential growth in Africa’s startup sector, and a case for more long-term funding for tech ventures in Africa.
“This deal to me demonstrates the power and flexibility that equity funding gives African founders, allowing them to reinvest in their businesses and play a long game. Funke played the long game and built an impactful business.”
An earlier version of this article said MainOne’s cable runs from Portugal to South Africa, instead of Portugal to Nigeria.
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