Smile raises R5bn

The telecoms company aims to enter SA once it has achieved national coverage of four other African countries.

Johannesburg - Smile Telecoms has raised R5 billion in financing as it seeks to accelerate the roll out of 4G networks in Africa, before setting its sites on entering SA.

The telecoms company, which currently operates in Nigeria, Tanzania and Uganda and will launch in the Democratic Republic of Congo in early 2016, aims to become the largest 4G operator in Africa by the end of the year.

Currently, Africa’s mobile telecoms landscape is dominated by the likes of MTN, Bharti Airtel and Orange. However, much of the network expansion being done is either 2G or 3G, and not long-term evolution - 4G - which offers superior speeds.

Smile is rolling out in the 800 MHz band and CEO Irene Charnley says it is this band the company is targeting in SA once it has achieved nation-wide coverage in its four other African countries.

Smile has applied for a licence in the 800 MHz band, but the local telecoms regulator - the Independent Communications Authority of SA - will only be able to allocate this frequency when SA has migrated to digital TV. Although progress is being made in freeing up this so-called digital dividend, SA has already missed the International Telecommunications Union’s deadline of mid-June to migrate, and the process will take another few years to be completed.

Smile, founded in 2007, currently has about 100 000 subscribers in three markets, but has yet to reach the point where it offers national coverage, says Charnley. She notes the R5 billion in investment will accelerate its roll out and get it to the point where it offers national coverage. “We’re just focused on growing.”

The funding comprises $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.

The injection will be used to accelerate national network roll-out, including equipment and services provided by Alcatel Lucent and Ericsson, a full Multiprotocol Label Switching network, a London Point of Presence and expanded international backhaul services, and to fund operational expenditure and working capital.

Smile aims to provide more than 300 million customers in four countries with access to its fast network.

Charnley, whose previous roles included being an executive director at MTN and Johnnic, was made Businesswoman of the Year in August 2000. She notes Smile is not taking its larger competitors head in in Africa, but rather aims to offer a complementary service that offers a viable alternative to the incumbents.

Charnley adds 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 2007 to about $600 million.

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.