Starcomms Losses Hit N5.3Bn

Starcomms Plc has reported a net loss of N5.3 billion in the third quarter ended September 30, 2012, indicating a steady decline of the telecom company when compared with the N478.69 million recorded in the corresponding period of 2011.

According to the report, total sales had more than halved from N16.1 billion in 2011 to N7.5 billion in 2012.

The company’s balance sheet remained precarious with net deficit of about N20 billion in 2012 as against N14.7 billion in 2011.

The third quarter report followed quarter-on-quarter performance trend for the ailing company. First quarter report had shown net loss of N1.9 billion while this mounted to N2.96 billion in the second quarter.

Shareholders of the company are to meet tomorrow (Friday) to consider the reconstruction of the outstanding shares of the company and acquisition of 90.5 per cent equity stake by a new core investor.

Approval of the reconstruction will help the company reap from a capital injection of $200 million by Capcom, a new core investors.

Capcom is a special purpose vehicle (SPV) created for the purpose of making the investment into Starcomms and other related transactions.

Investors under Capcom included MBC, a private trust with a focus on investing in emerging markets; Pan African Capital through its asset management division, PAC Asset Management; and the family offices, Bridge house Capital and Oldonyo Laro Estates.

As part of the investment agreement, Capcom would acquire, release and merge the spectrum licence of MTS and the CDMA mobile telecoms business of Multi-Links to that of Starcomms.

Besides, Capcom will provide $98 million in cash to finance the integration of MTS and Multi-Links into Starcomms and for the emergent company to meet on-going short-term losses in the business and to deliver the combined company’s new business plan.

The proposed transaction is expected to create a leading CDMA operator in Nigeria and represents a fundamental step as part of the consolidation move in the 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, the new entity will be positioned at the forefront of the shift away from current generation of services into a Long Term Environment (LTE) technology platform capable of delivering new 4G and related data and other services that will offer customers substantially improved performance.