Smile Telecoms Holdings, which owns and operates mobile wireless 4G LTE broadband networks in the 800MHz band in Nigeria, Tanzania and Uganda, has raised $365-million of debt and equity financing.
The company will use the funding to expand its existing 4G LTE mobile broadband networks and services, with the aim of offering clear voice services, with national coverage comparable to the largest 3G network in each of its current countries of operation this year. Smile will also launch its broadband network in Democratic Republic of Congo (DRC) early in 2016.
The funding is comprised of $50-million of equity, raised from the Public Investment Corporation on behalf of Government Employees Pension Fund (PIC), and a $315-million multi-tranche, multi-jurisdictional debt facility led by African Export-Import Bank with participation from the Development Bank of Southern Africa, Diamond Bank, Ecobank Nigeria, the PIC, the Industrial Development Corporation of South Africa and Standard Chartered Bank. Smile’s shareholders now comprise Al Nahla Group, a Saudi Arabia-based company, which is the majority shareholder; Renven Investment Holdings, a pan-African investment vehicle, in which Nigerian investors, including the Obijackson Group, are the majority; Verene, representing Smile senior management and social entrepreneurs from South Africa; Telecom Investments, a Saudi Arabian-based investment company; Capitalworks, an active alternative management company, specialising in investment in the African mid-market”; the PIC; and Smile employees.
The funding will be used to accelerate national network rollout, including equipment and services provided by Alcatel Lucent and Ericsson, a full MPLS (Multiprotocol Label Switching) network, a London point of presence and expanded international backhaul services, and to fund operational expenditure and working capital.
Smile’s objective is to become the broadband provider of choice for super-fast data and clear voice in each of its markets and to provide over 300-million potential customers in its four countries of operation with a fast, reliable and high quality platform to accelerate development and wealth creation. There is persuasive evidence linking broadband to job creation; the Brookings Institution states that “for every one percentage point increase in broadband penetration, employment is projected to increase by 0,2% to 0,3% per year.” Furthermore, according to the Broadband Strategies Handbook by The World Bank, “a 10% increase in the penetration rate of broadband in developing countries is associated with a 1,4% increase in GDP per capita”.
The funding is one of the largest capital raises ever for a telecommunications operator in Africa and brings the total funding committed to Smile since its founding in 2007 to approximately $600-million.
Irene Charnley, CEO of Smile, comments: “Now that we are fully funded to deliver national coverage of unrivalled super-fast internet access and clear voice services, our priority is to ensure that our customers experience and benefit from the power of high speed mobile broadband compared to the narrowband services available to date, including how to effectively manage the superior experience in terms of data consumption.”
Sheikh Mohammed Sharbatly, deputy chairman of Smile, adds: “I have recently had the joy of using the Smile network in Nigeria, and the quality is better than what we experience in the United Kingdom and in Saudi Arabia. By licensing 800MHz spectrum for commercial use at an early stage relative to many other countries, including high-income ones, the governments of Nigeria, Tanzania, Uganda and the DRC have each demonstrated commitment to be at the forefront of the broadband revolution and to accelerate development and GDP growth, and we commend them.”
According to Dr Daniel Matjila, CEO of the PIC: “We are excited about our investment in Smile Telecoms as it provides us with an opportunity to accelerate and realise our mandate to invest in the rest of the African continent. Telecommunications is one of the key drivers for economic growth and its importance cannot be over-emphasised.”