Capcom to invest N33bn in Starcomms

Contrary to reports that Code Division Multiple Access operators, Multi-Links, Starcomms Plc and MTS are in advanced merger talks that may lead to the birth of a new, bigger and well-funded operator to be known as Capcom, fresh facts emerged on Wednesday that the consolidated company would operate as Starcomms.

Starcomms is the only telecoms operator quoted on the Nigerian Stock Exchange, but the company has been in poor financial situation in the past three years.

Capcom, the major investor in the new Starcomms, on Wednesday reached an agreement with Starcomms’ board to make t $210m (N33bn) capital investment in the ailing CDMA operator.

Details made available to our correspondent revealed that Capcom would contribute to Starcomms certain assets such as the spectrum licence of MTS and the CDMA mobile telecoms business of Multi-Links.

As such, the consolidated Starcomms will integrate assets from MTS and Multi-Links.

In addition to facilitating the CDMA consolidation, Capcom will provide $98m (N15.4bn) in cash to finance the post-acquisition integration of the assets and meet ongoing short-term losses in the business, and to deliver the combined company’s new business plan.

In return for its investment in Starcomms, Capcom will receive the new company’s shares, which will result in Capcom owning 90.5 per cent of Starcomms restructured issued share capital.

In consideration of their proposed sales of certain assets to Capcom, both Helios Towers Mauritius Holdings Limited and Asset Management Corporation of Nigeria will own stakes in Starcomms.

This, according to available information, will represent less than 12 per cent of Capcom’s equity.

Capcom was founded by MBC, a trust of 20 years’ standing, whose portfolio companies manage over $1.25bn in the asset management and commercial banking sectors with focus on emerging markets.

The backers of Capcom include PAC Asset Management, Bridgehouse Capital and OldonyoLaro Estates.

With the investment in Starcomms, Capcom aims to create a national broadband Internet champion capable of significantly contributing to the government’s ambition to overcome the digital divide between Nigeria, as an emerging market, and other developed markets internationally.

With the benefit of the 20 MHz of contiguous 1900MHz spectrum to be held by the consolidated operations, the largest spectrum allocation for any mobile operator in Nigeria, promoters of the merger said Starcomms would be at the forefront of the shift away from current generation of services into Long Term Evolution technology platform capable of delivering new 4G and related data and other services that will offer customers substantially improved performance.

According to Starcomms’ Interim Chief Executive Officer, Mr. Olusola Oladokun, the company faces a severe liquidity crisis and the Board of Directors has, therefore, considered options available to introduce new capital into it.

He said the board decided that in the best interest of all stakeholders, it should engage Capcom to provide new capital, service current debt obligations and position Starcomms for future growth

The Board of Directors, according to Oladokun, believes that the proposed transaction represents the best option available to Starcomms to effect a strategic turnaround, improve the company’s financial position and retain value for its stakeholders.

“The proposal from Capcom will enable Starcomms to reduce its high level of borrowings and improve its low liquidity position. Given the significant challenges the business has faced over the last two years, Capcom’s investment will facilitate a strategic turnaround, improve the competitive position in the market and place the company on a growth path for the future,” he said.

See the article here:
Capcom to invest N33bn in Starcomms