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Visafone may acquire Starcomms

By on October 7, 2011

There are strong indications that Code Division Multiple Access (CDMA) Telco, Visafone may acquire rival provider, Starcomms.

A top official of Visafone, who confirmed that the company is talking with another CDMA, described it as “the best for the industry.” But he declined to speak on progress made so far.

The source, who spoke on condition of anonymity, said merger and acquisition of CDMAs is inevitable because of the dwindling fortunes of the segment.

He said: “It is a known fact that the CDMA segment of the telecom sector is not buoyant; we are not as prosperous as the Global System for Mobil communication  (GSMs) operators. Mergers and acquisition is inevitable. That is the only way the industry can move forward and remain competitive.

“We have plans to acquire Starcomms. We are the only strong CDMA left in Nigeria; there is no point competing feebly with each other when we can join forces to make the CDMA segment stronger.”

He said the company may change direction towards reopening the Multi-Links deal, if Starcomms’ fails, saying, “the deal was not closed after all, contrary to speculations.”

“If Starcomms does not pull through, Multi-Links is still there. Contrary to speculations, the deal was not closed and we did not lose anything. We are still on it and have chances of reopening acquisition talks,”  the source said.

As part of strategy to strengthen its hold in the CDMA market, Visafone had in March this year acquired the mobile assets of troubled Telco, Multi-Links for $52 million in a landmark deal.

The combined entity of Visafone and Multi-Links after the deal, created a total active subscriber base of 4.2 million for Visafone, with coverage area cutting across over 85 per cent of Nigeria’s land mass.

The deal, however went awry barely two months later when a court injunction nullified the sale of Multi-Links.

A tower company, Helios Investments, alleged that Telkom, the South Africa-based parent company of Multi-Links, did not fulfill its side of a 10-year tower lease agreement between them; saying it backed out after only three years.

A High Court sitting in Lagos, ruled that the disputed lease agreements were valid, blocking the sale of the company until the contract controversy is concluded by the two firms.

In unexpected turn of events, Helio Towers agreed to buy the embattled Multi-Links. Telkom thereafter sold the Telco to Helios Investments for $10 million.