CDMA operators sustain downward growth profileFUND paucity and regulatory challenges were identified yesterday as factors that compromised the actualization of $210 million (N41.5 billion) merger deal, targeted at reviving Nigeria’s moribund Code Division Multiple Access (CDMA) sub-sector of Nigeria’s telecommunications sector.
The merger deal, mooted in 2012, and was scripted to bring together CDMA operators including Starcomms, Multilinks and MTS, to revive their dying operations in Nigeria.
The merger was actually initiated by an American investment group, CAPCOM Limited, which planned to invest $210 million in the business company. If it had succeeded, Starcomms would have survived as the brand name.
CAPCOM was a special purpose vehicle established in 2012, for the acquisition of Starcomms shares and related transactions, with money raised from investment funds, hedge funds, family offices and industry partners around the world.
In an interview with The Guardian, the supposed Chief Executive Officer (CEO) designate for CAPCOM, Demola Elesho, reiterated that the deal was to help merge the CDMA operations of Starcomms, Multilinks and the property of former MTS.
Elesho, who is no more with the team on the deal, however, said the needed funding, both local and foreign, which didn’t come on time, was actually what halted going forward with the merger. Besides, The Guardian also gathered that slow regulatory interventions from both Securities and Exchange Commission and the Nigerian Communications Commission (NCC) also served as clog to the merger’s actualization.
“Unfortunately, up until the time I left them, which was till December 2014, the funding both local and foreign total achieved was not sufficient to realise the ambition”, he stated.
According to Elesho, who chairs ConSol, an indigenous call centre operator, though lots of money was raised but, “it was not just enough to realise that dream of buying an old company, pay off the debts and still have enough money to launch a new 4G/LTE technology. I know the other partners are still trying. Anything can still happen. I wished them luck.”
Meanwhile, the NCC statistics further showed a sustained downward profile from the operations of the CDMA operators. The remaining operators are Visafone and Multilinks.
According to NCC, while Nigeria’s teledensity is now about 108 per cent, the CDMA operators, which had 2, 125,941 subscribers in August lost 83,926 of them within a month, resulting to 2,042,015 by September.
On why the CDMA operations continued to nose dive in the country, Elesho said: “What we call the CDMA operator in Nigeria is just a bad tag because they are another operator using CDMA technology. So, I think CDMA technology in Nigeria was not successful not because the technology was not good, but it never saw the kind of investment both capital inflows and people investment like other technology in GSM.”
According to him, the CDMA technology came from second to third and to fourth before it lost the race completely, which is the consequences of competition, “and we must leave with the result and move on.”
It will be recalled that at the formal announcement of the merger plan in December 2012, the Acting Chief Executive Officer of Starcomms, the leading firm in the merger, Olusola Oladokun said that by April 2013, the $210 million investment from CAPCOM would reposition the company’s operations. He stressed that the company will be providing 4G LTE services. But the deal failed to fly.
Indeed, CAPCOM was expected to invest $112 million to the CDMA assets of Multilinks and MTS, while $98 million cash would go into Starcomms as part of the transaction.
Furthermore, Capcom was expected to raise $50 million of equity from a limited number of key investors, while additional funds will be provided through a $62 million loan from Africa Export Import Bank (Afreximbank).
