Smile Telecom lands $365m to fund 4G LTE expansion

Smile Telecoms Holdings Ltd, a provider of broadband services in Nigeria says it has raised $365 million in financing to accelerate its 4G LTE Network expansion across its operations in Africa.

Smile Telecoms, which owns and operates mobile wireless 4G LTE broadband networks in the 800MHz band in Nigeria, Tanzania and Uganda says the package includes a mix of debt and equity financing.

Smile says the funding will be used to expand its existing 4G LTE mobile broadband networks and services, such that by the end of 2015 it will offer clear voice services and have national coverage comparable to the largest 3G networks in Nigerian and other countries of operation, according to an official statement sent to Technology Times this morning.

Smile Telecoms owns and operates mobile wireless 4G LTE broadband networks in the 800MHz band in Nigeria, Tanzania and Uganda and is exploring broadband markets stakes in Democratic Republic of Congo (“DRC”) by early 2016.

According to Smile Telecoms its new funding is comprised of $50 million of equity, raised from the Public Investment Corporation on behalf of Government Employees Pension Fund (“PIC”), and a $315 million multi-tranche, multi-jurisdictional debt facility led by African Export-Import Bank with participation from the Development Bank of Southern Africa, Diamond Bank Plc, Ecobank Nigeria, the PIC, the Industrial Development Corporation of South Africa Limited and Standard Chartered Bank.

[blockquote right=”pull-right”]“Smile Telecoms owns and operates mobile wireless 4G LTE broadband networks in the 800MHz band in Nigeria, Tanzania and Uganda and is exploring broadband markets stakes in Democratic Republic of Congo (“DRC”) by early 2016.”[/blockquote]

Jimi Awosika, Managing Director, Insight Communications (left); Tom Allen, Chief Operating Officer, Smile; Ernest Azudialu Obiejesi, Chairman and Lee-Ann Cassie, Chief Corporate Services Officer of Smile Communications Nigeria Limited at media event to announce the rollout of the company’s broadband services in Lagos

Smile Telecoms says its shareholders now comprise Al Nahla Group, a Saudi Arabia-based company, which is the majority shareholder; Renven Investment Holdings, a pan-African investment vehicle, in which Nigerian investors, including the Obijackson Group, are the majority; Verene, representing Smile senior management and social entrepreneurs from South Africa; Telecom Investments, a Saudi Arabian-based investment company; Capitalworks, an active alternative management company, specializing in investment in the African mid-market”; the PIC; and Smile employees.

Under the terms, the funding will be used to accelerate national network roll-out, including equipment and services provided by Alcatel Lucent and Ericsson, a full MPLS (Multiprotocol Label Switching) network, a London Point of Presence and expanded international backhaul services, and to fund operational expenditure and working capital, according to the company.

“Smile’s objective is to become the broadband provider of choice for super-fast data and clear voice in each of its markets and to provide over 300 million potential customers in its four countries of operation with a fast, reliable and high quality platform to accelerate development and wealth creation”, the company said.

Smile Telecoms cites that there is persuasive evidence linking broadband to job creation linking this to the Brookings Institution that states that “for every one percentage point increase in broadband penetration, employment is projected to increase by 0.2 to 0.3 percent per year.”

Furthermore, according to the Broadband Strategies Handbook by The World Bank, “a 10 percent increase in the penetration rate of broadband in developing countries is associated with a 1.4 percent increase in GDP per capita.”

Smile Telecoms claims that the funding is one of the largest capital raises ever for a telecoms operator in Africa and brings the total funding committed to the technology company since its founding in 2007 to approximately $600 million.

Darisami International Consultancy Ltd acted as financial advisor to Smile.

Irene Charnley, Chief Executive Officer of Smile, said, “Now that we are fully funded to deliver national coverage of unrivalled super-fast internet access and clear voice services, our priority is to ensure that our customers experience and benefit from the power of high speed mobile Broadband compared to the narrow band services available to date, including how to effectively manage the superior experience in terms of data consumption.”

Sheikh Mohammed Sharbatly, Deputy Chairman of Smile, said, “I have recently had the joy of using the Smile network in Nigeria, and the quality is better than what we experience in the United Kingdom and in Saudi Arabia.

By licensing 800MHz spectrum for commercial use at an early stage relative to many other countries, including high-income ones, the governments of Nigeria, Tanzania, Uganda and the DRC have each demonstrated commitment to be at the forefront of the broadband revolution and to accelerate development and GDP growth, and we commend them.”

Dr Daniel Matjila, Chief Executive Officer of the PIC, said: “We are excited about our investment in Smile Telecoms as it provides us with an opportunity to accelerate and realize our mandate to invest in the rest of the African continent. Telecommunications is one of the key drivers for economic growth and its importance cannot be overemphasized.”