Starcomms Rekindles Hope In PTO Sector (Nigeria)
2005-11-30 16:03:45 | Viewed 923 times
At last some ray of hope seems to have appeared in the horizon for the Private Telecom Operators (PTO) sector of the Nigerian telephony market with the signing last week of a $23 million financing deal between Starcomms and a Chinese Bank. Starcomms, Nigeria’s leading PTO, secured the $23 million loan from the China Export-Import Bank, and the facility, which is the first of its kind to be obtained by any PTO in Nigeria, is to be used for the expansion of Starcomms’ network into selected cities across Nigeria.
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The signing of this loan becomes very significant as it serves as a sign that financiers have not given up on the PTOs sector of the Nigerian telephony market because of the difficult situation the sector has been since the deregulation of the telecom sector. The sector has for the past years been beset with so many problems including inability to pay staff salaries and interconnect indebtedness especially to GSM operators. |
Most operators have not also been able to meet their obligations to suppliers and other contractors. These problems have led to intense boardroom struggles that further affected the image of the companies in no some measures.
But most significantly, the problems handicapped the operators from tapping into the full potentials of this market as they could not expand their networks rapidly to cope with available demand in the country.
The resultant effect of these problems that besotted the sector was the reluctance of investors to put money into these networks to put them in a good steed to compete effectively in the market place. Banks and other finance institutions did not see the PTO as a profitable business, which should be supported. Instead much of the financing available for the sector was mostly at the disposal of GSM operators who were seen as more successful.
It is in this light that the recent signing of the $23 million loan agreement between Starcomms and the Chinese a China Export-Import Bank becomes very significant. The loan has rekindled interest in the PTO sector and also serves as a vote of confidence on the Nigerian economy coming from an offshore company.
Since the past two years, Starcomms has shown itself as a company that was determined to make an impact in this market, which has been dominated by the GSM sector.
While other operators were busy alleging that the GSM companies were squeezing them out of the market, Starcomms knew that the answer to the problems besetting the sector did not lie in passing blames on competition but on going back to the drawing board to redefine its approach to the market. It therefore defined a marketing strategy, which has seen it through the difficult times.
With the right positioning and the right investment, Starcomms can beat its chest and face competition no matter where it is coming from squarely. Its recent offerings in the market are indeed testimonies to the fact that it is ready to face competition squarely.
Only recently, the company introduced the lowest tariff for international calls at N15 per minute. It has also introduced SMS service on its network while it has also taken its services to many major Nigerian cities including Lagos, Kano, Maiduguri and Portharcourt.
From a subscriber base of less than a few thousands some two years ago, Starcomms has grown the network to above 200,000 subscribers, making it the biggest PTO in the country today, thanks to the innovativeness of its managers.
It is no doubt that Starcomms innovativeness has made it attractive to investors both within and outside the country.
Huawei Technologies Company Limited, who are the main equipment provider for Starcomms, and the largest telecom service solutions provider in China, facilitated the loan. Under the terms of the agreement, the China Exim Bank will release the funds to Zenith International Bank Plc., who will, in turn, lend to Starcomms.
The involvement of Zenith Bank in the loan package is instructive. Zenith is a leading bank in the country, which has a clear understanding of the Nigerian telecom terrain.
The fact that it is involved in the loan indicates that it has implicit confidence in the Starcomms brand and its ability to deliver on the loan package.
A statement issued by Huawei in Lagos underlined the significance of the loan to Sino Nigerian relationship: “This loan agreement represents the first time Sinosure and China Exim Bank will cooperate to do business with a non-governmental corporation in Nigeria, the statement remarked.
Starcomms Chief Operating Officer, Maher Qubain, expressed delight at the loan, describing it as a show of confidence, not only in his company, but indeed the Nigerian economy as a whole. He said that the funds will be utilized to prosecute an aggressive roll-out programme over the next few months, as well as to further consolidate Starcomms’ current position as the leading Total Communications Solutions provider company in Nigeria, through the continued provision of solutions that cater to the needs of both its individual and corporate customers.
Starcomms currently has over 200,000 subscribers on its network, the highest by any PTO in Nigeria. Its impressive market performance over the past few years has continued to make it attractive to both investors and financiers. It would be recalled that very early this year, the company secured a $43 million equity investment from Actis and Emerging Markets Partnership (EMP).
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