Capcom to Inject $210m in Starcomms

Starcomms Plc has inked an agreement with Capcom Limited, a major equity investor in the proposed merger of Nigeria's three Code Division Multiple Access (CDMA) operators to provide Starcomms with a capital investment of cash and assets independently valued at $210 million.

The proposed transaction will create a leading CDMA operator in Nigeria and represents a fundamental step as part of the consolidation move in Nigeria's telecoms industry.

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, Starcomms will be at the forefront of the shift away from current generation of services into an LTE technology platform capable of delivering new 4G and related data and other services that would offer customers substantially improved performance.

Monetising the new broadband services and applications would provide Starcomms with crucial first mover advantage in the Nigerian market with its 4G / LTE network rollout.

As part of the agreement, Capcom has agreed to cause the contribution to Starcomms of certain CDMA assets over which it intends to acquire control in separate, but related transactions.

 Capcom would contribute to Starcomms assets including the spectrum licence of MTS and the CDMA mobile telecoms business of Multi-Links.

In addition to facilitating the CDMA consolidation, Capcom would provide $98 million in cash to finance the post-acquisition integration of these assets to meet on-going short-term losses in the business and to deliver the combined company's new business plan.

In return for its investment into Starcomms, Capcom would receive new Starcomms shares which would 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 (AMCON) will own stakes in Starcomms (together representing less than 12 per cent of Capcom's equity following Capcom's investment) derived from Capcom's shareholding on completion.

Capcom was founded by MBC, a trust of 20 years standing whose portfolio companies manage over $1.25 billion in the asset management and commercial banking sectors focused on emerging markets. Capcom has attracted a group of family offices and funds committed to investing in the Nigerian telecommunications industry and participating in the development of the sector.

The backers comprise of a number of African and emerging market funds including Pan African Capital's asset management division PAC Asset Management and two private family offices with long experience of investing in Africa, Bridgehouse Capital and OldonyoLaro Estates.