Starcomms agrees to USD210m investment to fund merger

1 Nov 2012

Starcomms has reached an agreement with investment group Capcom Limited, under which the latter will invest USD210 million in the Nigerian CDMA operator in return for a 90.5% stake, Starcomms announced in a statement on the Nigerian Stock Exchange. Capcom – a special purpose vehicle created for investing in Starcomms and related transactions – comprises a number of investors, including MBC, a private trust with a focus on investing in emerging markets, and Pan African Capital through its asset management division, PAC Asset Management. As part of the agreement, Capcom aims to create a national broadband operator by acquiring the spectrum licence of MTS and the CDMA business of Multilinks, and provide USD98 million in cash to finance their integration with Starcomms, in a bid to improve its competitiveness in Nigeria’s overcrowded telecoms market. In return, Capcom will receive new Starcomms shares which will result in the group owning 90.5% of the operator’s restructured share capital, and as part of the overall transaction, both Helios Investment Partners and AMCON will acquire equity stakes in Starcomms derived from the Capcom shareholding on completion. The combined entity will hold 20MHz of spectrum in the 1900MHz band, which Starcomms says could allow it to migrate to a 4G Long Term Evolution (LTE) platform.

‘The proposal from Capcom will enable Starcomms to reduce its high level of borrowings and improve its low liquidity position,’ commented Starcomms’ interim CEO, Olusola Oladokun, adding: ‘Given the significant challenges the business has faced over the last two years, Capcom’s investment will facilitate a strategic turnaround, improve the competitive position in the market and place the company on a growth path for the future.’ The agreement is subject to shareholder and regulatory approval, including approval from the Securities and Exchange Commission and the Nigerian Stock Exchange.

Nigeria, Capcom Telecoms (formerly Starcomms), Multi-links