Code Division Multiple Access (CDMA) segment of the Nigeria’s telecoms industry is ringing into oblivion as a cloud of uncertainty hang over the sky-high hope raised by the proposed merger of Starcomms, Multilinks and MTS First Wireless, Nigeria CommunicationsWeek can now report.
The spectacular deal being put together by Capcom Limited, a holding company focused primarily on identifying, investing and building shareholder value in companies in the African telecommunications sector is touted as a breather for the embattled sub-sector.
But some transaction hiccups including approvals; administrative bottle necks; and legal knots to be untied have all conspired to hobble the deal, some 10 months after Capcom declared its interest to provide Starcomms (the product of the merger of Starcomms, Multilinks and MTS) with a capital investment of cash and assets independently valued at $210 million.
Nigeria CommunicationsWeek recalled Starcomms, one of the companies’ in the merger had in December last year, warned that the company was at risk of bankruptcy if the merger failed.
Mr. Olusola Oladokun, former Interim chief executive officer, Starcomms Plc, said over the years, the company has been faced with numerous challenges due to the harsh operating environment and is experiencing difficulties in its operations.
He disclosed that Starcomms’ debt profile currently stood at N15 billion, adding that the company has stopped servicing its debts so as to conserve cash.
Elsewhere, Multilinks is hemorrhaging after shutting down part of its CDMA business and focusing more on the fibre service operation.
MTS First Wireless on the other hand, had slipped into history until the merger deal surfaced. But it remains a very attractive bride because it is sitting on the best frequency band in the telecom industry.
Nigeria CommunicationsWeek gathered that the CDMA sector got into trouble in the first place due to a combination of factors including corporate mismanagement.
Today, all the CDMA operators in Nigeria have just 2.5 million lines according to the Nigerian Communications Commission (NCC’s) figure for July 2013 with Visafone accounting for over 2 million of the sum total. in contrast, the GSM segment has in excess of 120 million lines.
To say that CDMA operators are hanging by hair breath is a gross understatement, they are in a very bad shape.
The same fraudulent and self-serving practices of some members of board and management and the overbearing influence of chairmen or MD/CEOs of CDMAs, especially in family-controlled businesses led to the collapse of the banking industry sometime ago.
Experts also point at non-compliance with laid down internal controls and operation procedures, biased recruitment exercises and general lack luster management practices as some of the reasons why the companies have failed to click.
Elsewhere, local financiers repulsed by the companies’ stinking financial records have also turned their backs preferring to fund global system for mobile communications (GSM) operators with proven corporate practice.