Multi Links, Starcomms and MTS merge to form CAPCOM

Multi Links, Starcomms and MTS have concluded merger arrangements that would produce a strong network operator to be known as CAPCOM.

About $200 million is said to have been injected into the emergent firm by its core investors.

CDMA operators – also known as Private Telephone Operators (PTOs) have been living under the shadows of the GSM operators in Nigeria.

CDMA is the major telephony technology in US and some mature economies outside of Europe, where GSM holds sway.

Low capitalisation, poor promotion of CDMA technology, subscribers’ preference for GSM telephony, and corporate governance issues, have seen the fortunes of these CDMA operators dwindle over time.

According to industry analysts, only Visafone, itself a product of merger and acquisition involving Cellcom, ITN and Bourdex, has remained competitive in the GSM dominated industry.

Starcomms and Multi-links, which at various times were the toast of phone users, have been in a steady decline in recent years.

A document published by industry practitioners’ website, IT & Telecom Digest, says the strategy of the investment is “to invest $50 million in the equity of CAPCOM, transferable into the ordinary shares of Starcomms PLC—a 10-year established Nigerian telecoms mobile CDMA operator, with spectrum in the 1900MHz range—alongside $150 million of equity derived from CAPCOM’s existing shareholders.

“To simultaneously consolidate Starcomms with two other Nigeria CDMA—Multi-Links and Cyancom, formerly MTS—creating a single national Long Term Evolution (LTE) Broadband operator with 20Mhz of bandwidth in the 1900Mhz frequency range, to build from an existing combined 2012 base of 160,000 data consumers each paying $24- $32 per month to a base of 2, 500, 000 data customers by 2016.

“The $200 million investment funds the acquisition of Multi-Links and MTS; recapitalises Starcomms and provides it with sufficient capital and liquidity to finance its existing creditors and working capital; and permits it to expand its existing network through the introduction of 4G/LTE technology to become a major provider of Broadband services to Nigeria’s burgeoning consumers.”

IT & Telecom Digest further gathered that the emerging company has as its shareholders MBC, 53 percent shares; Middle East Capital Group, 25 percent shares while Helios Investment Partners holds 11 percent shares.

Others said to hold shares in the company include Oldonyo Laro Estate 5 percent; Bridgehouse Capital Limited 3 percent; Asset Management Company of Nigeria 2 percent and Private Equity Investors 1 percent.

As presented in the deal document, a new board of directors has been constituted to manage the affairs of the new company. Stefan Allesch-Taylor is being proposed as the Chairman.

He is an experienced investor, Chief Executive/Chairman and co-founder of companies in the property, industrial, retail, technology and financial services sectors. Over the last ten years, he has created substantial value in a number of companies, both listed and privately owned, where he has been appointed to represent the interests of significant shareholders in seeking strategic changes in those businesses. Since 1993, he has been an advisor to a number of substantial international trusts and business leaders.