Starcomms Nigeria Plc, the only telecommunications operator listed on the Nigerian Stock exchange (NSE) is rallying its shareholders ahead of its December 28, 2012 court-ordered annual general meeting (AGM) to accept the $210 million proposed transaction that will lead to the merger of Starcomms, Multi-Links and MTS, three Code Division Multiple Access (CDMA) operators into one company called Capcom.
At a briefing to intimate the media about the ongoing efforts to resolve all outstanding issues, top executives of Starcomms and Capcom said the deal would lead to the emergence of Capcom as the first operator to deploy Long Term Evolution (LTE), a fourth generation (4G) technology pathway with capacity for high speed data, voice and internet services for consumers in Nigeria.
The deal will lead to Starcomms relinquishing 90.5 per cent of its shares to the new investor, Capcom. Starcomms is posting to its shareholders documentation relating to Capcom's proposed investment into the company. The transaction will be effected through a scheme of arrangement and a private placement, both of which have been approved by the Board of Directors of Starcomms. Speaking about the transaction, Olusola Oladokun, Interim CEO of Starcomms Plc said "Starcomms has experienced significant challenges over the past two years, at the heart of which have been the changing competitive and operational dynamics of the Nigerian telecommunications industry, especially in the voice business. As a result, the Board of Directors has been considering a number of options to re-position the Company for growth.
"After careful consideration, we believe that the investment by Capcom, which will provide the capital required for continued operations as well as enabling investment in new technology, combined with the injection of new spectrum and the CDMA assets of Multi-links, creates the best possible platform for Starcomm's future. We strongly recommend - and look forward to - the transaction being approved by our Shareholders."
He said as result of the challenges, Starcomms faces a severe liquidity crisis, which prompted the Board of Directors to consider options available to introduce new capital into the company, stressing that without this new capital the company will fail as a going concern and shareholder value will be lost. He said Starcomms has reduced outstanding financial debt from N31.9 billion in Q1 2010 to N15.1 billion as at Q3 2012.
Giving more insight into the deal, Capcom's CEO designate for Starcomms post transaction completion, Demola Elesho said the aggregation of spectrum allocations from Multi-Links and MTS, which is a contiguous 20MHz of spectrum in the 1900MHz range, the largest allocation of any telecoms provider in Nigeria will enable Starcomms to deliver a complete range of mobile broadband services using new generation IP-enabled, high speed broadband 4G/LTE technology.
Capcom is expected to start operations early next year and launch LET within 6-12 months. The court ordered meeting and the 2011 AGM of the company are scheduled to take place on December 28th2012 to enable Shareholders to vote on the scheme and to pass special resolutions giving effect to the private placement and approving the transaction upon which, following final regulatory approvals, Capcom will assume control of Starcomms.