Nigerian telecommunications companies operating non-GSM technology, led by Starcomms, had another chance to challenge dominant rivals, such as MTN Group, after takeovers and new investments, the Association of Licensed Telecoms Operators of Nigeria said on Friday.
Starcomms, a Nigerian telecommunications company, said last month that it had reached an agreement with Capcom for investment of cash and assets worth $210 million (R1.8 billion) in return for a 90.5 percent stake, handing over control.
Starcomms will get assets including a licence operated by MTS First Communications and the cellphone business of Multi-Links Telecommunications, giving it the biggest spectrum allocation of any cellular operator in Nigeria and making it the first operator able to run the faster 4G data services in the country, according to the statement.
“There is a huge opportunity in providing broadband from greater funding and the combination of spectrum licences of Starcomms and Multi-links,” Gbenga Adebayo, the president of the association, said last week. “Broadband is required to be competitive in the industry.”
Nigeria has one of Africa’s fastest-growing telecommunications industries, with about 107 million telephone subscribers as of September, according to industry regulator the Nigeria Communications Commission.
The code division multiple access, or CDMA, networks have about 4.8 million customers, or a 3.02 percent share of the country’s phone subscribers, with fixed lines at 0.44 percent and global system of mobile communication, or GSM, at 96.54 percent.
Capcom is a Lagos-based holding company, with investors including Nairobi-based Oldonyo Laro Estate and London-based Helios Investment Partners, a private equity company backed by George Soros.
Capcom would buy Multi-Links from Helios and pay with Starcomms shares, which would make Helios a 10.5 percent shareholder of Starcomms, Funmi Abiola-Odutola, a communications consultant representing Capcom said last week. Fergus Wheeler, a consultant for Helios, declined to comment, saying the discussions were confidential.
“The combination of spectrum allocation of the companies making up Starcomms will count as a competitive advantage,” Akintola Salam, a telecommunications analyst at Financial Derivatives, said.
Inadequate investments have impaired CDMA growth while GSM networks run by South Africa’s MTN, Abu Dhabi-based Emirates Telecommunications, Mumbai-based Bharti Airtel and Nigeria’s Globacom have prospered.
MTN Nigeria, with more than 45 million customers, has a 42 percent share of the country’s phone subscribers. Globacom is second biggest with 19.8 million subscribers, while Airtel is third with 18 million.
“Starcomms and their new backers will be hoping that they leapfrog the GSM guys by investing heavily in LTE 4G,” FBN Capital analyst Bunmi Asaolu said. – Bloomberg