Smile raises R5bn, talks of IPO - TechCentral

Smile raises R5bn, talks of IPO

Irene Charnley

Irene Charnley

Smile Telecoms, the wireless broadband communications company founded by former MTN executive Irene Charnley, has raised US$365m (R5bn) in new debt and equity financing to expand its coverage in Tanzania, Uganda and Nigeria and to establish its first presence in the Democratic Republic of Congo (DRC).

Charnley said on Tuesday that the money will be used to build out the company’s 4G/LTE infrastructure and attract new customers as it expands its data network and rolls out high-definition voice services using a technology known as voice over LTE, or VoLTE.

Smile’s new funding is comprised of $50m in equity raised from South Africa’s Public Investment Corp (PIC) on behalf of the Government Employees Pension Fund and a $315m, multi-tranche, multi-jurisdictional debt facility led by African Export-Import Bank with participation from the Development Bank of Southern Africa, Diamond Bank PLC, Ecobank Nigeria, the PIC, the Industrial Development Corp and Standard Chartered Bank.

Smile’s shareholders now comprise Al Nahla Group, a Saudi Arabian-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 investment company; Capitalworks, an active alternative management company, specialising in investment in the African mid-market; the PIC; and Smile employees.

The new money will also be used to complete a “multiprotocol label switching” network, establish a network point of presence in London and build international backhaul services. Some of the money will also be used to fund operational expenditure and working capital requirements.

The latest capital raising — which Charnley said took three years to complete — brings total funding committed to Smile since its founding in 2007 to about $600m. The company has about 100 000 customers across Tanzania, Uganda and Nigeria. It operates exclusively in the 800MHz band — also known as the “digital dividend” band — which is well suited for providing coverage at lower cost as fewer base stations are needed to provide services when compared to operators using higher frequency bands.

The new funding round means Smile is now “fully funded”, Charnley said. An initial public offering could follow in three years to “unlock value” for shareholders. She said she doesn’t know which share market the company will consider. “We will go where the value is,” she told TechCentral.

Charnley said Smile remains interested in getting access to South Africa’s digital dividend spectrum and will participate in a licensing process when it happens. The company first applied for spectrum in South Africa as far back as August 2008.

By the time Smile launches services in South Africa, it will be highly experienced at building infrastructure at 800MHz and will be ready to launch a compelling offering to local consumers, she said.  — © 2015 NewsCentral Media


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