The merger of Starcomms, MTS and Multi-Links is under way, as Starcomms secures a $210 million investment deal with Capcom Limited.
The deal will see Capcom inject finances and assets into the telecoms operator, and in return will take a 90.5 percent stake.
Assets to be pumped into Starcomms include the spectrum licence of MTS, and the Code Division and Multiple Access (CDMA) mobile telecoms business of Multi-Links, thus implementing the much-awaited merger of the three operators.
It had originally been thought that the newly-formed entity would be rebranded under the name of Capcom, however, speculation is now rife that the entity will retain the market favour of the Starcomms brand, which is the only telecoms operator listed on the Nigerian Stock Exchange.
Under the terms of the deal, Capcom will also provide a cash injection of $98 million to the newly merged entity to facilitate post-formation development, reduce short-term losses and to enable fulfilment of the new company’s business plan.
The business plan for coming months appears to be ambitious, with Starcomms hinting that with the newly acquired assets in place, it hopes to roll out LTE in Nigeria in the foreseeable future.
The company said in a statement announcing the deal on Wednesday: “The proposed Transaction will create a leading CDMA operator in Nigeria and represents a fundamental step as part of the consolidation move in the Nigerian telecoms industry.”
Explaining further, the company added: “With the benefit of the 20 MHz of continuous 1900MHz spectrum to be held by the consolidated operations, the largest spectrum allocation for any mobile operator in Nigeria, Starcomms will be at the forefront of the shift away from current generation of services into a Long Term Evolution (“LTE”) technology platform capable of delivering new 4G and related data and other services that will offer customers substantially improved performance. Monetizing the new broadband services and applications will provide Starcomms with crucial first mover advantage in the Nigerian market with its 4G / LTE network rollout.”
As the biggest telecoms market in Africa, Nigeria has experience an oversaturation of the market by telecoms operators springing up – which has necessitated moves such as the current merger.
Airtel, Etisalat and MTN currently hold a combined market segment of approximately 95 per cent, causing other operators to struggle to stay afloat.
The current deal will “provide the significant capital required to place the Company on a solid platform for future growth and expansion”, the company announces, although it will have to roll out an innovative and attractive offering for customers if the new entity is to compete with current market-dominating competitors.