Revealed! How Asian Vendor Helped Kill Starcomms

Starcomms Plc, the once flourishing code division multiple access (CDMA) operator, was experiencing excruciating difficulties in its operations. The company owners searched frantically for a way to ease this burden.

They believed they found that, and more in the spectacular deal touted as a breather for the embattled sub-sector by Capcom Limited.

Capcom proposed to merge Starcomms, Multilinks and MTS First Wireless into a big CDMA powerhouse with heavy financial war chest.

 But many months later, there are uncertainties hanging over the sky-high hopes raised by the proposed merger.

 There another trouble; Starcomms is now operating in fits and starts no thanks to the antics of an Asian based telecommunications equipment vendor which is helping the CDMA operator ring into further distress.

Nigeria CommunicationsWeek investigations revealed that this vendor in a bid to sell its switches approached Starcomms ‘management and offered them its switches at no cost.

That was only a marketing gimmick to enter the telecommunications market of the country.

Oblivious of the resultant effects, Starcomms’ management accepted the offer and deployed the switches, hoping to give GSM operators run for their money in the highly competitive telecom market.

But it was only a Greek gift as some components of the switches started malfunctioning immediately and requiring the management to spend millions of dollars to purchase the parts from the vendor which gave out the switches free in the first instance.

Nigeria CommunicationsWeek gathered that the cost of the replacing the components which fail at intervals were so high it created a big hole on the purse of the local company.

This continued to a point that Starcomms owed this vendor for the supplies of these components and there was no money to phase out these switches and go for more superior ones.

The resultant effects were hemorrhaging cash flow and poor quality of service provisioning.

It would be recalled that Capcom Limited, had put forward a proposal for the merger of Starcomms, Multilinks and MTS with a capital investment of cash and assets independently valued at $210 million.

But some transaction hiccups including approvals; administrative bottle necks; and legal knots to be untied have all conspired to hobble the deal, some 17 months after Capcom declared its interest in Starcomms.

Starcomms, one of the companies’ in the merger had in December of 2012, warned that the company was at risk of bankruptcy if the merger failed.