Helios Towers Nigeria (HTN), the largest builder and manager of cell sites for telecommunications service providers in Nigeria in general late last week decalred that it has taken total control of Multi-Links Nigeria Limited, the first private telephone operator (PTO) in the country.
Multi-Links has passed through rough times changing hands from local to foreign and back to local ownership.
Multi-Links was established in 1997 and started operating with 10,000 digital lines using Time Division Multiple Access (TDMA) technology which it transcended by deploying Code Division Multiple Access (CDMA), a more robust digital technology that allows it to offer both voice, data and internet services with its region of operation.
On November 6, 2006, Multi-Links sought and was among the eight companies that were awarded Unified Access Service Licence (UASL) by the NCC. This unified licence enabling it further expand its services and provide a wide variety of services covering digital mobile and fixed telephony, ISP, payphone, full international gateway and national long distance services and varied value added services.
HTN owned by Helios Investments Partners (HIP) builds and maintains telecommunications towers and leases space on those towers to wireless telecommunications services providers across Nigeria enabling operators outsource non-core activities and passive infrastructure and focus resources on improving their core products and services. HTN is a pioneer of this service in Nigeria.
A flourishing operator
Multi-Links was a flourishing Nigerian CDMA service provider when it was acquired by Telkom South which sought a route to enter Nigeria’s fast growing telecom market. In May 2007, Telkom South Africa extended its footprint to West Africa through the acquisition of a 75 per cent majority stake in Multi-Links. Telkom increased its ownership interest in Multi-Links to 100 in January 2009, extending its total acquisition costs to $400 million.
Multi-Links essentially operate two telecommunications service business units: a mobile business utilising CDMA technology with more than one million approximate subscribers. It also has a fibre optic network offering national data transmission capacity and limited metro and last mile connectivity. Significant investment including total capital investment in excess of $1 billion has been made into this network, increasing the footprint of the network more than six fold over the past four years.
Multi-Links constructed its terrestrial fibre optic network connecting 21 of Nigeria’s 36 states, as well as the Federal Capital Territory at a cost of over $150 million. Multi-Links’ terrestrial fibre optic network is one of only four active national and the only open access fibre optic networks in Nigeria and is the only independent national transmission network. Its terrestrial fibre optic network spanning 8,232km provides access to several circa tower sites across several major cities in Nigeria.
Multi-Links services about 31 high profile corporate organisations on its fixed broadband network. They include APS, Keystone Bank, CHAMS Plc, Diamond Bank, Etisalat, Honeywell, K-Konnect, Layer3, MFM, RCCG, MTN, Stanbic-IBTC, Telnet, VDT, ZOOMmobile, Weco System, and Visafone.
A Culture of aggrandisement
Things turned sour for the once flourishing and well managed entity when Telkom seconded about 100 staff to Nigeria to manage their new acquisition. This was a large number for such a small company especially when most of the jobs could be managed by Nigerians. Four different chief executive officers were also brought in to make the company the largest CDMA operator and challenge the hold of GSM operators but alas, they failed.
While the chief executives occupied themselves with repositioning the new Multi-Links Telkom, they invested heavily on fixed broadband by taking the terrestrial fibre network to 8,232 kilometres. But they failed to rein in their counterparts whose lavish lifestyles were taking a toll on the finances of the company.
The expatriate staff lived large, residing in high brow estates like Banana Island in Ikoyi, Lagos to the detriment of the young company’s finances. It was understood that Telkom paid N1.6 billion for Banana Island apartments for five years for the South Africans. They were also driving the latest cars and sport utility vehicles (SUVs) while earning salaries that were 100 times higher than their colleagues in Nigeria. The expatriates were milking the company dry, over paying themselves and repatriating the proceeds back to their country.
An aggrieved Nigerian employee said the $280 million paid in 2007 for 75 per cent was too high. Analysts had chided Telkom for paying three times the $44 million recommended to Telkom by KPMG, the consultancy company initially hired to value Multi-Links. Telkom went ahead to pay an additional $130 million for the remainder 25 per cent.
It was understood that Ekwow Spio-Garbrah, a government representative on the Telkom board who objected to the acquisition was subsequently dropped on April 2009. The expatriates also signed some controversial contracts which called into question their management skills. Among them was the payment for the controversial 10.2 million subscriber platform for which Multi-Links paid Comverse every month whereas it had less than two million subscribers.
There was also the controversial 10-year lease agreement with Helios Towers in which Multi-Links paid over $200 million between 2007/2010 whereas its consultant had advised them to build the same number of towers for $80 million.
Controversial Sale
Towards the end of 2010, Multi-Links Telkom announced through its managing director, Mr. Vincent Raseroka that Telkom was pulling out of Nigeria’s CDMA market as the unit had become a loss making venture. Several interests were shown by the likes of Etisalat, Starcomms and Visafone with Visafone beating Starcomms to acquire the company for $65 million dollars.
Starcomms had bided $45 million for the same venture. However, a 10- year tower deal signed by Multi-Links with Helios Tower to build and rent its cell sites was abruptly terminated and Helios resulted to the courts which put an end to Visafone sale. Today, Helios is 100 per cent owner of Multi-Links acquiring it for $10 million with an option to pay Multi-Links 30 per cent of sale proceeds if sold within the next three years.
A New focus
Mr. Martins Dirk, Chairman, Multi-links said last week that a new management team appointed by Helios Investment Partners (HIP) for Multi-Links is being headed by the transition consultant Mr. Demola Elesho, who will act as chief executive officer (CEO) and Mr. Simon Poole, the chief financial officer (CFO). He said “The long transition leading up to HIP acquisition of Multi-Links caused uncertainty and impact the Multi-Links brand and resulted in loss of subscribers on the network.”
Dirks said Multi-Links was repositioning its business under a new ownership and management and would continue to run its two telecommunications service business units. “The long transition leading up to HIP’s acquisition of Multi-Links caused uncertainty about the brand that impacted Multi-Links’ brand and resulted in churn on Multi-Links’ network.
“Before now, Multi-Links has focused more on the construction and expansion of its terrestrial fibre optic network than on selling capacity on this network to potential customers. Currently, Multi-Links’ terrestrial fibre optic networks’ business model entails selling bandwidth to carriers and enterprise customers. Multi-Links is currently focused on improving its performance through cost efficiency, selective penetration and targeting of medium to high-end customer acquisition and retention.”
He said the CDMA business is challenged and with very active competitors in the market, it is difficult to effect a turnaround. “Multi-Links’ business is currently being refocused to achieve improved and cost efficient performance.