VENTURES AFRICA – Competition in Nigeria’s telecommunications sector is set to get stiffer as three troubled Code Division Multiple Access (CDMA) telecom operators in the country finalize merger preparations to form a larger and stronger telecom, CAPCOM.
The embattled CDMA companies – Multi-Links, Starcomms and MTS, are part of the Nigerian CDMA telecom sub-sector characterized by plummeting growth and profit due to the local market’s preference for GSM telephony, poor promotion of CDMA technology, market-uncompetitive capitalization, and corporate governance issues.
Nigerian publication, BusinessDay reports that the merger will see the investment of “$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 report further stated: “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.”
Stefan Allesch-Taylor has been proposed as the Chairman of the newly formed network operator, CAPCOM. Stefan is a world-renowned stockbroker and an experienced executive and investor in various sectors. He has chaired the Global Evolution hedge funds and has been an adviser to many business leaders.
In 2001, the Nigerian Communication Commission gave operating licenses to GSM operators, which provided effective service to the Nigerian market.
With the introduction of new GSM operators in the Nigerian market, competition became stiffer, service charge plummeted and mobile telephony penetration deepened. Today, the GSM subsector services over 60 million Nigerian subscribers.
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