Merger deal puts Starcomms ahead of peers in broadband provisioning

Ben Uzor Jr

The recent merger in the Code Division Multiple Access (CDMA) landscape has placed Starcomms Plc ahead of its counterparts in the telecommunications industry specifically in the area of broadband provisioning. Starcomms Plc said it reached an agreement with CAPCOM Limited for investment of cash and assets worth $210 million in return for a 90.5 percent stake, handing over control of the company. For quite some time, CDMA networks have struggled to survive the stiff competition in a GSM dominated market. The merger deal however has given Starcomms Plc a new lease of life, and places it in good stead to compete favourably with the bigger networks such as MTN, Globacom and Airtel.

As part of the merger deal, Starcomms Plc will get assets including a license operated by MTS First Communications Limited and the mobile business of Multi-Links Telecommunications Limited, giving it the biggest frequency spectrum allocation for any mobile network operator in the country. This ultimately makes Starcomms Plc the first telecoms operator with the capability of offering faster 4G/LTE services, according to the statement. Starcomms Plc’s ability to provide 4G/ LTE (Long Term Evolution) puts it a vantage position considering that most telecoms operators already see that existing wireless technologies (3G, WiMAX) would not be a definitive solution to Nigeria’s internet access problem.

Industry analysts told Business Day that many mobile operators are looking to LTE as a new revenue generator because it offers them the ability provide innovative offering well beyond voice and data services. “There is a huge opportunity in providing broadband from greater funding and the combination of spectrum licenses of Starcomms and Multi-links. Broadband is required to be competitive in the telecommunications industry”, said Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) in an interview with Bloomberg recent.

“The combination of spectrum allocation of the companies making up Starcomms will count as a competitive advantage,” Akintola Salam, a telecommunications analyst at Lagos-based Financial Derivatives Company said in an e-mailed response to questions from Bloomberg. Inadequate investments impaired CDMA growth while GSM networks run by Johannesburg-based MTN, Abu Dhabi-based Emirates Telecommunications Corporation, known as Etisalat, Mumbai-based Bharti Airtel Limited and Nigeria’s second national carrier, Globacom Limited prospered. MTN Nigeria, with more than 45 million customers, has a 42 percent share of the country’s phone subscribers, according to September data on the website of the Nigerian Communications Commission (NCC). On the other hand, Globacom is second biggest with 19.8 million subscribers, while Airtel is third with 18 million.

“Starcomms and their new backers will be hoping that they leapfrog the GSM guys by investing heavily in LTE 4G,” Bunmi Asaolu, an industry analyst at Lagos-based FBN Capital Ltd., said in an e-mailed response to questions.