Post-Capcom deal, Starcomms plans rollout of 4G LTE by mid-2013

By Olubunmi Adeniyi

Lagos. December 3, 2012: Starcomms Plc today confirmed plans to light up fourth generation (4G) Long Term Evolution (LTE) by mid-2013 under plans by the CDMA operator to reinvent itself as a major player in the Nigerian telecoms sector.

The 4G LTE network standard for wireless communication delivers high-speed data for mobile phones and data terminals and has come within scope of Starcomms’ growth plans as it awaits shareholder approval of the 90.5 per cent equity acquisition by Capcom Limited.

Ademola Eleso, CEO Designate for the Starcomms post-Capcom transaction completion dropped the hint in Lagos today while unveiling plans for the consolidation underway to merge three CDMA networks: Starcomms, Multi-Links and MTS.

While seeking for the shareholders approval, Eleso explains that “the opportunities for data providers in Nigeria have only started to be tapped. By combining additional spectrum from Multi-Links and MTS with the existing network and subscriber base of Starcomms we believe we can quickly create Nigeria’s leading provider of mobile broadband through an industry-leading 4G-LTE network.”

According to him, “this can only be good news for Starcomms’ loyal customers, partners, staff and shareholders and I and our whole team look forward to the challenge of building Nigeria’s new Broadband internet champion.”

Under the new arrangement, he says that the integration of Multi-Links, MTS and Starcomms is expected to take between six and nine months while adding that concerning the process, a significant amount of technical work has already been done to ensure that there will be no disruption to customer.

He says that Capcom is committed to rolling out 4G services as soon as practicable as they form a key part of the overall turnaround strategy expected to go live during the initial integration phase.

“Starcomms will start the roll-out process in the big cities across Nigeria, but anticipates being able to make the services more widely available in the coming years”, Eleso adds.

According to him, the new Starcomms will provide a strong and stable platform for the future with the newly-invested capital allowing the company to service current debt obligations and so remain a going concern whilst enabling it to invest for future growth.

“Capcom will inject $98 million of cash and $112million of independently valued assets into the company with the proposed rights issue subsequently raising further cash for use as working capital” he adds.

Also commenting on the transaction, Olusola Oladokun, interim CEO, Starcomms explains that the deal will be effected through a Scheme of Arrangement and a Private Placement both of which have been approved by the Board of Directors of Starcomms.

The Scheme has also been filed with and obtained the necessary sanction of the Federal High Court and both are now subject to approval by Starcomms’ shareholders, Oladokun adds.

According to him, the court-ordered meeting and the 2011 Annual General Meeting (AGM) of the company are scheduled to take place on December 28, 2012 to enable shareholders to vote on the scheme and to pass special resolutions giving effect to the private placement. It will also include approving the transaction upon which, following final regulatory approvals, Capcom will assume control of Starcomms.

“Starcomms has experienced significant challenges over the past two years, at the heart of which have been the changing competitive and operational dynamics of the Nigerian telecommunications industry, especially in the voice business. As a result, the board of directors has been considering a number of options to re-position the company for growth”, Oladokun adds.

“After careful consideration, we believe that the investment by Capcom, which will provide the capital required for continued operations as well as enabling investment in new technology, combined with the injection of new spectrum and the CDMA assets of Multi-links, creates the best possible platform for Starcomms’ future. We strongly recommend and look forward to – the transaction being approved by our shareholders,” he adds.

Starcomms is the only telecoms operator quoted on the Nigerian Stock Exchange.

Capcom Limited is a special purpose vehicle established in 2012 with money raised from investment funds, hedge funds, family offices and industry partners around the world with years of commercial experience of emerging markets.

Capcom is purchasing $210 million worth of shares in Starcomms at the last quoted market price of 50 kobo adjusted for the proposed share consolidation of 1 for 100 shares which means that the share price on relisting will be N50.

This $210 million investment is in the form of telecoms assets, including 100 percent of the shares of the holding companies for Multi-Links Telecommunications Ltd and MTS being contributed by Capcom to Starcomms and cash.

Capcom has signed binding sale and purchase agreements for the shares of the holding companies owning the CDMA business of Multi- Links and spectrum licence of MTS.