Africa Online, the continent's most broadly-based internet service provider, has taken a step towards its goal of becoming Africa's dominant ISP by forming a joint venture with Worldcom subsidiary UUNet to develop internet services across 14 countries.

Africa Online, founded in 1994 and now owned by the UK's African Lakes, will control 49.99 per cent of the new company, to be called UUNet Africa. UUNet SA, the network service provider subsidiary of WorldCom, will take the rest.

UUNet Africa will be based in South Africa and is expected to start trading by the first half of 2001.

It will focus on eight countries including Kenya, Uganda, Tanzania, Swaziland, Zimbabwe, Zambia, Ghana and the Ivory Coast. Service for six others is expected to be rolled out later. The joint venture provides a springboard for African Lakes' expansion throughout the continent and furthers its ambition to become Africa's top ISP.

Although penetration of telephones and personal computers remains low, the market for internet services is expanding rapidly through corporate use and public access products.

African internet users are estimated to number about 3m, with 2m of those in South Africa.

This works out at about one internet user for every 250 people, against a worldwide average of one in 35 and a north American and European average of one in three.

Paul West, senior executive at African Lakes, said: 'There's no way the markets are saturated. There are 240,000 telephone lines in Kenya alone.'

Earlier this year, African Lakes bought Net 2000, its main Kenyan rival, for $3.3m.

It now has more than 24,500 dial-up customers and a further 24,000 regular users at its 670 e-touch centres - bureaux where customers can access e-mail and the internet.

Founded in the 1870s by Glaswegian missionaries, the company was a traditional conglomerate with interests in mining, plantations, hotels and railways.

It restructured several years ago, refocusing the business on IT, the internet and automotives.

In 1998, it invested $2.8m in Africa Online through convertible loans, giving it the right to a 65 per cent stake, and is now in the process of acquiring the rest.