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TABLE OF CONTENTS
01 │
Disclaimer
01
02 │
Company History
02
03 │
Vision and Mission Statements
03
04 │
Company Directors and Associated Parties
04
05 │
Board of Directors, Management & Shareholders
05-06
06 │
Post-Launch Management
07
07 │
Project Overview
08
08 │
Nigerian Telecommunications Industry Overview
09-12
09 │
Historical Financial Statements
13
10 │
Strategic Plan
14-15
11 │
Financial Strategy and Projections
16-21
12 │
Projected NPV and IRR
22
13 │
Projected Enterprise Value
22
14 │
SWOT Analysis, Risk Factors, and Mitigants
23-25
16 │
Contacts
26
01 │ DISCLAIMER
DATE:
This Presentation has been prepared for and addressed to:
RECIPIENT:
Important Note
The GiCell Project Presentation (“Presentation”) has been compiled and created by GiCell Wireless Limited (“Company”) and
Company alone is responsible for the accuracy of the information contained herein. BlueDyn Capital S.A. (“Agent”) has been
retained and appointed as exclusive agent by GiCell Wireless Limited to provide business development and strategic consultancy
services. BlueDyn Capital SA cannot independently confirm the accuracy of information contained herein; therefore, it does not
accept any liability whatsoever for any direct or consequential loss arising from any use of material contained in this
Presentation.
The contents of this Presentation are provided only for discussion and illustrative purposes. Accuracy of information contained
within this Presentation will have to be verified by prospective investors independently. If investors are in any doubt regarding
the contents of this Presentation they should consult their investment manager, attorney-at-law, or financial advisor. This
Presentation is being provided to a limited number of prospective investors and is intended to be addressed only to the recipient
to whom it has been given, and should not in any way represent an invitation to the public for subscriptions of shares in the
Company. This Document is not an offering memorandum, term sheet, nor an offer to buy and or sell securities.
Risk Warning
The value of the underlying risk of investing in the Company will be influenced by complex and interrelated political, economic,
financial and other factors that affect the currency markets generally. Ownership of shares in the Company will expose the
investor to many different risks, including (without limitation) interest rate, foreign exchange, time value, and political risks.
Investors may also be exposed to foreign exchange risk, to the extent that they invest in products denominated in a currency
other than their home currency. Although information in this Presentation has been obtained from sources believed to be
reliable, we do not represent or warrant its accuracy, and such information may be incomplete or condensed. There is no
promise or guarantee of future performance and past or projected performance is not necessarily a guide to future
performance. No guarantee, representation or warranty is made as to the completeness of the information in this Document.
This Presentation does not constitute a prospectus, offer, invitation or solicitation to buy or sell securities or accept deposits or
to provide any other products or services in any jurisdiction to an person to whom it is unlawful to make such an offer or
solicitation, nor should it be construed to constitute any investment advice. This Presentation is not a recommendation to invest
and readers are personally responsible for ascertaining its factual correctness. All estimates and opinions included in this
document constitute our judgment as of the date of the Presentation and may be subject to change without notice at any time.
Laws and regulations in certain countries may restrict the manner of distribution of this Presentation and persons who come into
possession of this Presentation are required to inform themselves of and observe such restrictions. Laws and regulations in
certain jurisdictions may prohibit investors from purchasing shares in the Company. Residents or Nationals of certain
jurisdictions may be subject to exchange controls and should seek independent advice before investing with the Company.
Confidentiality
This Presentation together with its contents is confidential and is being submitted to selected recipients only. By accepting a
copy of this Document the recipient agrees to, on behalf of itself and its related legal entities, and each of their affiliates or
anyone connected thereto, that it may not be reproduced, distributed or disclosed (in whole or in part) to any other person or
party.
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02 │ HISTORY
GiCell Wireless Limited (“Company”) was incorporated in January 2006 with its corporate headquarters in Abuja,
Nigeria, with the aim of providing efficient and affordable telecommunication services in its niche market
particularly in the un-served rural areas and under-served urban centers. Company was awarded the National
Unified Access Service License by the Nigerian Communications Commission which includes the Digital Mobile
Service, Fixed Telephony Services, Full International Gateway Services and the National Long Distance Services.
In 2006, Company qualified for and enjoyed a one-time subsidy of US $5.5 million from the International
Development Association (IDA,) a member of the World Bank group to set up a CDMA 450 network to address
access deficiencies in the un-served rural areas and under-served urban centers.
Company is the sole license holder of the CDMA 450 MHz band in Nigeria, operating under the Universal Access
Expansion Agreement and License for the first universal pilot project covering five states of Adamawa, Borno,
Kwara, Oyo and Cross Rivers. This band is particularly valuable due to its low frequency which enables far-reaching
geographical coverage with CDMA technology using significantly less base stations than other frequencies to
achieve the same coverage. This results in the ability to provide both voice and data communications at a fraction
of the cost of competing technologies. The technology is particularly well suited for providing high-speed voice and
data services where competing technologies have difficulty in delivering quality services, such as offshore, in less
densely covered population areas, and dense population areas where there are existing network capacity
constraints.
Company has built a CDMA 450 network to provide Universal Access Services along the following routes: Yola-Biu
route, Calabar-Obubra route, and Kwara-Yashikera route. These were selected among the candidate routes as they
were determined to be the least served areas in telecommunication services in Nigeria. The network has a
transmission backbone component for voice and broadband data services in over 400 named communities and is
expected to reach approximately 30% of the total population of the five states.
CURRENT GICELL COVERAGE AREA
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03 │ VISION AND MISSION STATEMENTS
Vision
Company's vision is to connect people with value added products while building a telecom company that will be a
global player.
Mission
To be proactive in deploying leading-edge infrastructure for the promotion of reliable, robust, and affordable
communication products and services to customers in a responsive and ethical manner whilst adding value to the
shareholders and employees.
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04 │ COMPANY DIRECTORS AND ASSOCIATED PARTIES
REGISTERED OFFICE
GiCell Wireless Limited
Plot 349 J F Kennedy Close
Asokoro, Abuja
Nigeria
COMPANY DIRECTORS
Shareholders
USMAN ABUBAKAR GUMI
No. 1A Coronation Crescent, Kaduna
IBRAHIM ABUBAKAR
No.11, Moddibo Adama Road, Kaduna
AHMAD USMAN
No.17, Durban Street , Wuse 11, Abudja
DR. HALIMA SADIYA GUMI
No. 11, Moddibo Adama Road, Kaduna
IRENE EKWEOZOH
NIGCOMSAT Ltd. (Nigerian Government Agency)
Obasanjo Space Centre, Abuja
AUDITORS
MANAM & ASSOCIATES
Chartered Accountants
2nd Floor Hafsat Plaza
No 4 Constitution Road
Kaduna
ACCOUNTANTS
MESSRS KAYODE JAYEOLA & CO.
Chartered Accountants
2nd Floor, Rear Flat,
23, Osolo Way
Ajao Estate, Lagos
TECHNICAL PARTNER
Network Operator
LM ERICSSON NIGERIA LTD
17, Walter Carrington Crescent
Victoria Island, Lagos
COMMERCIAL MANAGEMENT
SWEDTEL INTERNATIONAL CO
Single Business Tower
Sheikh Zayed Road
Dubai, UAE
STRATEGIC BUSINESS CONSULTANT
Appointed Agent
BLUEDYN CAPITAL SA
One Capital Place, Level 4
Grand Cayman KY1-1103
Cayman Islands
Secretarial Office
Al Habtoor Business Tower
Level 28
Dubai Marina, Dubai, UAE
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05 │ BOARD OF DIRECTORS, MANAGEMENT & SHAREHOLDERS
USMAN A. GUMI
Shareholder/Founding Partner
President and CEO
Mr. Usman Gumi obtained a BSc degree in physics from Ahmadu Bello University in 1992. He is also a certified
Oracle Database Administrator from NIIT. He is an active entrepreneur with engaging interests in a number of
market sectors including transportation of petroleum products.
In 1989, he became the Managing Director of GIC NIGERIA LTD, which led to the appointment of the company as
Thuraya Satellite Company Service Provider in Nigeria. He sits on the Board of directors of Kaduna Textiles Limited,
the largest textiles company in Nigeria from 1992 to date. He is currently the President and Chief Executive Officer
of GiCell Wireless Limited.
THE NIGERIAN COMMUNICATIONS SATELLITE LIMITED
Shareholder
Represented by Mrs. Irene Ekweozoh, Director
The Nigerian Communications Satellite (NIGCOMSAT) Limited was incorporated on April 4, 2006 as a company
under the auspices of the Federal Ministry of Communication Technology. NIGCOMSAT is a young, vibrant,
innovative company, charged with the management and operation of the first geostationary communications
satellite in sub-Sahara Africa with an existing work force of over 300 highly skilled and qualified employees.
IBRAHIM GUMI
Shareholder
Director
Mr. Ibrahim Gumi holds a post graduate Diploma in Mass Communication from University, St. Denis Paris, France
and a graduate of Comparative Literature from Damascus University, Syria. He is an industrialist with vast
experience in Bakeries and production of plastic material. He is the Chairman of GIC NIG LTD Polythene and Plastic
Recycling Plant in Kaduna.
DR. HALIMA SADIYA GUMI, MBBS, DCH, MRCPCH UK
Shareholder
Director
She graduated from the prestigious Ahmadu Bello University Medical School as one of the first female doctors
from Zamfara State. She is a Pediatrician in the UK with major interest in respiratory and neonatology. In her spare
time she is dedicated to promoting the Nigerian culture in a modern context with the aim of empowering young
women in particular to stretch to their potential.
AHMAD USMAN
Shareholder
Director
Mr. Ahmad Gumi is a versatile business man and a member of the board of directors of many companies with
interest in transport, agriculture and sports developments.
SHEHU AMINU SALIHU
Chief Operation Officer
Mr. Shehu Aminu Salihu is a graduate of Telecommunications Engineering and holds a Masters degree (M.Sc with
Honours) in Telecommunications Engineering from the St. Petersburg University of Telecommunications in St.
Petersburg, Russia. He has over 14 years working experience in the telecommunications industry in both Nigeria
and abroad.
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He commenced his career in the Telecommunications industry with the Nigerian Mobile Telecommunications Ltd
(M-Tel) as a Switching Engineer. He then moved to Econet Wireless Nigeria Ltd (currently Airtel Nigeria Ltd), as one
of the pioneer Engineers of the company. He rose to the level of Manager (Core Network Planning & Design)
before leaving in 2005 to start a career in Consulting. His first assignment is with Ericsson Pakistan where he
worked initially as a Senior Core Network Design and Optimization consultant and eventually became the Team
Lead on the Warid Telecoms Phase 4 and Phase 5 network expansion projects. He then moved to Ericsson South
Africa as a Senior Core Network Design consultant where he participated in various projects for several operators
in the sub-Saharan Africa region.
INNOCENT GANIZO
Chief Technology Officer
Mr. Innocent Ganizo obtained a First class BSC Honors Degree in Computer Science from the National University of
Science and Technology in Zimbabwe (Southern Africa) in 2004. Coming from an IT background and having worked
in the Banking and IT sectors, he has become a seasoned Telecommunications professional after having worked for
a telecommunications vendor, Huawei Technologies, as a Core Network Engineer and adopting different roles such
as project manager, services manager to mention but a few. He has undertaken many fixed core network, CDMA
and WCDMA projects within Zimbabwe and many other southern African countries (Malawi & Mozambique).
UMAR S. GAMBO
Chief Marketing Officer
Mr. Gambo's experience Spans more than 22 years in telecommunications and business management. He oversees
all aspects of the GiCell's Marketing management. Before now he worked for the Nigeria External
Telecommunications (NET), Nigerian Telecommunications Limited (NITEL) and Nigerian Mobile
Telecommunications (M-TEL) for 22 years. His experience in both fixed and mobile (GSM) Business was derived
from the leadership positions he held as: NET pioneer Head of Customer Care services in Northern District office,
Head of customer service, Marketing and customer operations in the North West, Head of Marketing in North East,
Territorial Manager in Rivers State, Deputy General Manager Business Development (NITEL) and General Manager
Marketing and Sales (M-TEL) marketing and sales (M-TEL).
He is credited with re-engineering exchange operations; customer service methods, business process, and
branding and channel management in both the fixed and mobile (GSM) Network operations and marketing. Mr.
Gambo developed MTEL into GSM competition in product development, channel management and lunched MTEL's corporate and product brands. He retired in 2005. He is a fellow of the institute of Direct Marketing, a
member of the Nigerian Institute of Management and Member of Nigerian Institute of Management.
ZUBAIRU MOHAMMED BORODO
Executive Director
Mr. Borodo is the Chairman and CEO of ZIN NIGERIA LTD a major leading distributor of all the GSM network
operators in Nigeria (MTNN, AIRTELL, GLO) with a monthly turnover of N1.2 Billion operating in Kano, Kaduna,
Katsina and Abuja. He is also a co-founder and a Director with majority shareholding in HAYZUN Bureau De
Change, ZIN BDC, NAIBAWA BDC, ZAZ BDC and WARAM BDC operating in Kano, Kaduna and Abuja and has the
controlling shares in ZAZ Connection Ltd, an Internet Service operation Company, ZAZ Property and Development
Co, LTD and ZAZ Construction NIG Ltd. Mr. Borodo is an HND Holder in Business Administration with 10 years
experience in Telecommunication and Bureau De Change. He has attended various courses in London, Ghana and
South Africa.
CHIEF LINUS AKPANIT
Executive Director
Mr. Akpanti is the Chairman CEO of Linco Standard Ltd that is into the importation of General Goods since earlier
80s, and also into Civil Constuction, the company constructed the Egume/Achalu/Elubi Road in Kogi State and the
Mayo Belwa River Bank Erosion control in Adamawa state. Mr. Akpani is a philatrophist of repute where he built a
Water System and Street Light Electrification of Umouji in Idemili North LGA of Anambra State. He provides shelter
and Food provision to over 150 families every year.
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06 │ POST LAUNCH MANAGEMENT
GiCell has signed a Management and Consultancy Agreement with SWEDTEL INTERNATIONAL to ensure the
highest standard of quality and operational efficiency covering the following areas: Corporate Development,
Network Planning and Development, Product and Service Development, Financial Control and Planning, Marketing,
Customer Service, Network Operation and Maintenance.
Founded in 1968 by Telia in Sweden, Swedtel was the world’s first operator-owned telecoms consulting company.
With more than 600 projects under its belts, working in more than 100 countries around the globe, Swedtel adds
value brings vast international and cross cultural experience.
Swedtel’s function would be augmented by the following key professionals amongst others:
Rikard Slunga, CEO
Swedish Citizen Born 1960
Mr. Slunga’s has vast experience of developing and managing start-ups and early stage International Telecom
Operators and building up the commercial customer base. With over 27 years of global work experience, he is a
veteran of the telecom industry. He has previously served as CEO for a mobile operator offering mobile telephony
and mobile broadband services based on a CDMA 450 network in Sweden. His professional experience includes
senior executive and consultancy roles with global leaders including Ericsson, Orange, Telia and Vodaphone. His
latest position was with Cell C in South Africa as Chief Network Transformation Officer.
Paul Meredith, CTO
Brittish Citizen, Born 1959
Mr. Meredith has over 20 years of experience as senior executive across the telecommunications sector. He has
successfully worked with Swedtel on multiple projects globally, including one in Nigeria as the Technical Project
Manager for the Shell Nigeria Telecom Project. He has also held CTO positions with companies like Paktel, MTN
Cameroon, and MTN Uganda and Celtel Kenya. He is a seasoned negotiator and has deep technical knowledge with
a focus on mobile networks and solutions. Mr. Meredith is a professional and experienced leader who is able to
adapt and effectively work in difficult and challenging environments.
Sigfrid Karlsson, CFO
Finnish Citizen Born 1962
Mr. Karlsson is a business-oriented Finance & Control professional with over 26 years of international experience
in telecommunications. He has a long working history with Nokia and Nokia Siemens Networks. Most recently he
served as the CFO for Nokia country operations in the Philippines. He led F&C activities for one of the largest and
most prominent NSN Customer Teams in Middle East and Africa. He specializes in managing telecom business and
related value chains, planning and controlling new business start-ups, sales and markets. He holds a MSc in
Economics and Business Administration.
Matz Olsson, CMO
Swedish Citizen Born 1958
Mr. Olsson is an experienced telecom professional with close to 30 years of experience in the Telecom industry. He
has held senior positions as Director with various organizations both internationally and in Sweden including
British Telecom, Telia Sonera and Tele8. He has also worked for Telia in several countries setting up the marketing
organization. He is an excellent communicator and team builder, able to synchronize sales and marketing teams
working towards a single set of targets.
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07 │ PROJECT OVERVIEW
In conjunction with and supported by Ericsson, Company is presently working on rolling out the “GICELL CDMA 450
NETWORK” using the latest and most cost effective technology in the market. This nationwide 3G Network enables
the Company to introduce new and innovative data services catering to the growing needs of Nigerian Industries
and Government using its 450 MHz band license taking advantage of its position as the sole operator of this
particular frequency.
According to Ericsson, the 450Mhz which GiCell holds in Nigeria, is a platinum-grade spectrum that will allow GiCell
to achieve a CAPEX/OPEX of about one–twelfth (1/12) of that of its competitors not operating in this spectrum.
This therefore provides GiCell an excellent opportunity to offer cheap services of similar quality and thereby
achieve wide market penetration with tremendous socio-economic benefits to the Nigerian citizens.
Ericsson is the world’s largest provider of telecommunications hardware, software, and services, and is a leader in
the provision of CDMA solutions in the 450 MHz band. As the project technology partner, Ericsson will be providing
all required network hardware, software, and technical solutions. Ericsson has identified three key market
segments that it believes hold significant potential for growth in Nigeria and that are particularly suited to the
deployment of a CDMA 450 MHz network. These market segments are:
1.
The Oil & Gas industry – This market is targeted in the first phase of the project which includes fixed,
semi-mobile, and mobile oil platforms as well as floating production, storage, and offloading vessels
where existing mobile technology cannot reach due to frequency limitations.
2.
The Mobile Broadband Market - This market includes not only end users but also corporate and
government customers (e-Health and e-Education).
3.
The Machine-to-Machine Market – This market encompasses data connections between devices used in
industry and government applications such as location based services, mobile shipping and logistics
services, and security and border control monitoring)
The growth strategy has been split into 3 Phases, starting with a clear ambition to target the Oil and Gas segment
in Phase 1. For the initial Phase key geographic regions have been identified that are believed to hold the most
potential for take-up of these services for the implementation of Phase 1. The geographic regions are: Calabar,
Port Harcourt, Warri, Uyo, Aba, Smaller coastal and rural areas in south-eastern Nigeria. To maximize profitability,
GiCell plans to deploy 60 base stations using Ericsson equipment in these areas, by leasing 51 existing sites and
building 9 additional new sites that will provide CDMA coverage.
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08 │ NIGERIAN TELECOMMUNICATIONS INDUSTRY OVERVIEW
The Nigerian telecommunications market has grown tremendously since 2001 when the first three GSM
companies were given operating licenses. It is presently estimated to have over 58 million subscribers and is
growing at an annual rate of more than 35%. The rapidly growing industry has been managed by the Nigerian
Communications Commission. Backed by the Telecom Act of 2003, it has established the National Frequency
Management Council and a Universal Service Provision Fund. These together with the ending of the GSM
monopoly in 2006 and the onset of unified license Regime led to an increase in the number of operators and
subscribers.
Currently there are four major GSM operators and over twenty private telecom operators in Nigeria; however,
with a population of over 160 million, Nigeria is the most populous country in Africa with significant market
potential. Many untapped opportunities are available for new innovative players such as GiCell. Presently, the
Nigerian telecom market has a penetration rate of less than 40% and the number of phones per population remain
one of the lowest anywhere in the world. Majority of subscribers are dissatisfied with the pricing and quality of
services offered by existing operators. But most importantly, there are vast ineffective coverage areas in various
parts of the country. Many rural areas are either not served or greatly underserved. GiCell Wireless Limited intends
to exploit these and other opportunities by introducing world-class service at economically efficient rates.
The lower technology infrastructure costs compared to those incurred by the earlier operators and the capital
support from the World Bank for the pilot projects means that GiCell will is well positioned to offer lower prices to
consumers against the existing operators. GiCell Wireless Limited also won the bid to manage the Bauchi and Kano
zone of the National Rural Telephony Project (NRTP) network with a bid of Sixty Million United States Dollars (USD
$60 million), which is almost equivalent to N4 billion.
This network which has already been set up by Alcatel Shanghai Bell and ZTE covers thirty six(36) towns and local
governments areas in the first phase with a fixed wire exchange system and a CDMA 20001 x 2 network. The
details are:
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A. Fixed Wire-Line (Exchange) System ALCATEL SHANGHAI BELL (ASB)
Providing Voice, Facsimile and Dial-up connections services at data rate of up to 64kbps (internet)
STATES
LOCAL GOVT. AREA
TOWN
1.
Adamawa
Girei
Demsa
Mayo-Belwa
Girei
Demsa
Mayo-Belwa
2.
Borno
Konduga
Damboa
Bama
Konduga
Damboa
Bama
3.
Bauchi
Giade
Shira
Bogoro
Giade
Yana
Tafawa Balewa
4.
Gombe
Balanga
Yamaltu Deba
Kwami
Tailase
Deba
Malam sidi
5.
Plateau
Barkin Ladi
Langtang South
Riyom
Dengi
Mabudi
Riyom
6.
Taraba
Donga
Ibi
Zing
Donga
Ibi
Zing
7.
Kano
Madobi
Tsanyawa
Kura
Madobi
Tsanyawa
Kura
8.
Katsina
Batagarawa
Charanchi
Bakori
Batagarawa
Charanchi
Bakori
9.
Jigawa
Auyo
Biniwa
Gwaram
Auyo
Biniwa
10.
Yobe
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Fune
Karasuwa
Gari-Nangere
Gwaram
Damagun
Jajimaji
Gari-Nangere
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B. CDMA 2000 1X ZTE
Providing Voice, Facsimile, PTT, SMS, and Dail-up connection services at data rate up to 153.6 kbps (internet)
STATES
LOCAL GOVT. AREA
TOWN
1.
Plateau
Bokkos
Bassa
Shendam
Bokkos
Bassa
Shendam
2.
Gombe
Akko
Billiri
Nafada
Kumo
Billiri
Nafada
3.
Taraba
Yorro
Gassoi
Sardauna
Pantisawa
Mutum-Biu
Gembu
4.
Adamawa
Madagali
Michika
Madagali
Michika
5.
Borno
Biu
Monguno
Gajiram
Biu
Monguno
Nganzai
6.
Bauchi
Kirfi
Zaki
Ningi
Karfi
Katagum
Ningi
7.
Adamawa
Fufore
Jimeta
Girei
Song
Gombi
Gombi
Fufore
Jimeta
Jiberu
Wuro Daudu
Gombi
Garkida
8.
Kwara
Ilorin
Kiama
Kosobosu
Ilorin
Kiama
Kosobosu
9.
Oyo
Igbeti
Igboho
Kisi
Igbeti
Igboho
Kisi
10.
Cross River
Calabar
Akampka
Akpet
Ugep
Obubra
Calabar
Akampka
Akpet
Ugep
Obubra
11.
Yobe
Geidam
Tarmuwa
Nguru
Geidam
Babangida
Nguru
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STATES
LOCAL GOVT. AREA
TOWN
12.
Jigawa
Babura
Kazaure
Buji
Babura
Kazaure
Gansta Buji
13.
Kano
Kibiya
Garko
Gabasawa
Kibiya
Garko
Gabasawa
14.
Katsina
Kafur
Daura
Dutsimma
Mahuta
Daura
Dutsimma
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09 │ HISTORICAL FINANCIAL STATEMENT
REPORT OF THE AUDITORS TO THE MEMBERS OF GICELL WIRELESS LIMITED (Extract)
We have audited the financial statements on pages 5 to 12 which have been prepared under the historical cost
convention and on the basis of significant accounting policies stated on note 1.
Respective Responsibilities of Directors and Auditors
In accordance with the provisions of the section 334 and 335 of the Companies and Allied Matters Act, CAP C20
LFN 2004, the Company's Directors are responsible for the preparation of financial statements It is our
responsibility to form an independent opinion based on our audit, on those statements and to report our opinion
to you.
Basis of Opinion
We conducted our audit in accordance with generally accepted Auditing Standards. An audit includes examination
on a test basis of evidence relevant to the amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the Directors in the preparation· of the financial
statements; and of whether the accounting pol1cies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial
statements are free from material misstatement, whether caused by fraud or other irregularity or error. In
forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial
statements.
We have examined the Books of Accounts of the Company and have obtained all the information and explanations
which we considered necessary. The accounts are in agreement with the Books of Accounts which in our opinion
were properly kept.
Opinion
In our opinion, the financial statements give a true and fair view of the state of the Company's affairs as at 30th
June, 2011 and of its loss and cash flow for the year then ended and comply with the Companies and Allied
Matters Act, CAP C20 LFN 2004.
MANAM & ASSOCIATES
Charted Accountants
KADUNA – NIGERIA
Original Audit Report is available upon request.
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10 │ STRATEGIC PLAN (Ericsson Report)
Executive Summary: Mobile Data Services - CDMA 450
The purpose of this document is to offer a high-level summary of the CDMA
Mobile Broadband project ambitions, as agreed between GI-Cell Wireless Ltd
and Ericsson by the Memorandum of Understanding signed between the two
parties on May 27th 2011.
1.
THE VISION – A Network Society
Ericsson is guided by the vision that by 2020, the world will see 50 billion connected devices. In the vision of more
than 50 billion connected devices, everything that can benefit from a connection will be connected. People are
already online, connected and interacting. The next step is to get things and places online and interacting. And we
are moving fast in that direction. The vision of more than 50 billion connected devices by 2020 may seem
ambitious today, but with the right approach, it is within reach.
The vision of more than 50 billion connected devices, based on ubiquitous internet access over mobile broadband,
devices or things will be connected and networked independently of where they are. Falling prices for
communication, combined with new services and functionality connecting virtually everything to serve a wide
range of commercial applications, individual needs and needs of society.
Networks that can support the exponential growth in the number of devices and meet the needs of specific
vertical industries are crucial elements in the vision of more than 50 billion connected devices. The solutions must
be open and standards-based to provide interoperability between ecosystem players and vertical industries.
Ericsson understands this is happening all over the world, also in Africa, also in Nigeria - and now is the time to
start building these networks.
2.
THE TECHNOLOGY
GI-Cell has chosen CDMA 450 as main technology to provide data services. CDMA 450 has excellent characteristics
as enabler for data and Machine to Machine (M2M) communication, and offers highly competitive coverage as
well as capacities.
Today, in EV-DO Rev.B Ph. 1, capacities o up to 9.3 / 5.4 Mbps and by June 2012 - with Rev.B Ph. 2 they will hit 14.7
/ 5.4. However the main differentiator for this project - the Unique Selling Point - is coverage. Of course wider
coverage will lead to fewer sites, thus demanding less CAPEX and OPEX - allowing GiCell to offer competitive rates
and thus enabling a speedy uptake.
Using 450 Extended Cell, coverage can go as high as up to 120 km.
There is today a CDMA450 ecosystem available, supporting multiple applications and users, and supporting crosstechnology roaming.
This makes CDMA 450 the perfect technology for the services this project intends to bring to the Nigerian market.
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3.
THE PROJECT
The overall aim of the GiCell Mobile Broadband project is to introduce specific data services catering to the needs
of Nigerian Industries and Government. In the initial Phase, three specific services - targeting three specific types
of customers will be introduced:
3.1 The Oil Industry
Most oil rigs today are far out of reach of any commercial telecom operator, so they are using mainly satellite
communications. Strategically positioned Radio Base Stations in the GI-Cell network can offer data and VPN
connectivity to these oil rigs, allowing them to operate company-specific applications, data and voice over IP
services. The business potential that emerges from the savings for the oil companies from using the GI-Cell
network instead of satellite communications is one of the cornerstones of the financial viability of the project.
The superior coverage in the 450 band will also allow the network to support solutions for Critical
Infrastructure Protection related to the oil industry. The installations of oil companies in Nigeria have since a
long time suffered from damage caused willingly by people who want to steal oil, or for political reasons.
Ericsson has long experience of providing solutions for Critical Infrastructure Protection (CIP) and Border Area
Safety.
The Oil Industry component of the GiCell Project will benefit from extensive experience Ericsson has gathered,
among others with the Oil Industry of Norway.
3.2 The 3G Operators
MTN, Glo, Airtel and Etisalat are all offering Mobile Broadband over GPRS/EDGE and 3G to their end users.
However the data traffic on these networks comes at a price: recently the NCC issued a ban on promotions to
all operators who cannot guarantee that Quality of Service will be maintained considering the increase in
traffic that results from these promotions.
Offloading data traffic from the GSM/3G networks onto a roaming partner such as GiCell would liberate
bandwidth and capacity for the mobile operators, thus enabling them to continue competing for market share
in the mobile space. Cross-technology roaming is already a reality and will make agreements between a
GSM/3G operator and GI-Cell possible.
3.3 The Power Utility Companies
As a third component of the initial project, power metering and electric power generation optimization has
been identified. The CDMA450 network of GI-Cell will have the ability to offer these services to the utility
companies engaged in power production and distribution.
The TransData Waison Smart Meter advanced functions include:
•
•
•
•
•
•
Automatic reporting during outages
Reporting of power quality e.g. over/under voltage
Remote disconnect of customers
Remote load control of customer equipment
Tamper detection - Terminal cover removal
Tamper detection – Magnetic tamper
Integrated with Stark Energy Power Management Software:
•
•
•
Meter data collection
Consumer front end portal
Has been integrated with e-Meter utility billing software
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11 │ FINANCIAL STRATEGY & PROJECTIONS (Ericsson Report)
Financial Memorandum
Limitation of Responsibilities
This Financing Memorandum (“The Memorandum”) intends to provide
information and clarification for potential financing institutions on the
proposed project to deploy a mobile network in the CDMA 450Mhz band (“The
Project”) by Gi-Cell Wireless Ltd (“Gi-Cell”) in Nigeria.
The Memorandum was prepared on behalf of Gi-Cell by Ericsson AB (“Ericsson) on a best-efforts basis to assist
with Gi-Cell’s efforts to secure financing. Calculations and estimates have been made based on information
provided by Gi-Cell and external data providers. While Ericsson has made effort to provide accurate information, it
cannot guarantee or warrantee the accuracy of any information provided by third parties used in calculations or
estimates.
The Memorandum also contains forward-looking statements and calculations that are subject to risks and
uncertainties that could cause actual outcomes of The Project to vary materially. The preparation of this document
and the calculations and estimates within in no way constitute any responsibility on Ericsson’s part for any and all
variances in the outcome of The Project.
BACKGROUND
Gi-Cell is a mobile network operator (“MNO”) currently operating a mobile network using CDMA technology in
northern Nigeria. Gi-Cell holds an exclusive national license in Nigeria in the 450 MHz band. This band is
particularly valuable due to its low frequency which enables far-reaching geographical coverage with CDMA
technology using significantly less base stations than other frequencies to achieve the same coverage. This results
in the ability to provide both voice and data communications in a coverage area at a fraction of the cost of
competing technologies. The technology is particularly well suited for providing high-speed voice and data services
where competing technologies have difficulty in delivering quality services, such as offshore, in less densely
covered population areas, and dense population areas where there are existing network capacity constraints. All of
these are highly relevant to the Nigerian market.
Ericsson is the world’s largest provider of telecommunications hardware, software, and services, and is a leader in
the provision of CDMA solutions in the 450 MHz band.
Gi-Cell has selected Ericsson as its technology partner for The Project, and will providing networking hardware,
software, and solutions for Gi-Cell. Mutually agreed and signed Memorandums of Understanding and Letter of
Intent are in effect to confirm both parties commitment.
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PROJECT DESCRIPTION
Gi-Cell in conjunction with Ericsson have identified three key market segments that it believes hold significant
potential for growth in Nigeria, and that are particularly suited to the deployment of a CDMA 450mhz network.
These market segments are:
1.
The oil & gas industry (including fixed, semi-mobile, and mobile oil platforms as well as floating
production, storage, and offloading vessels where existing mobile technology cannot reach due to
frequency limitations);
2.
The mobile broadband market (the accessing of internet data using both mobile handsets and dongles).
This market includes not only end users but also corporate and government customers for project like eHealth and e-Education;
3.
The machine-to-machine market (the data connections between devices used in industry and government
applications such as location based services, mobile shipping and logistics services, and security and
border control monitoring).
In addition to the three main market segment that are in focus for this project, voice communications over the
CDMA 450 network will be added so as to provide extended rural telephony services to the underserved areas in
Nigeria.
The Project as such has been split into five yearly Phases, starting with a clear ambition to target the Oil and Gas
segment, but also starting deployment of the nationwide network in Phase 1 to be densified and expanded over
the subsequent Phases.
For the initial Phase, Gi-cell and Ericsson have identified the key geographic regions that are believed to hold the
most potential for take-up of Mobile Broadband services.
The roll-out rate assumed in this Memorandum is:
•
Year 1: 360 sites
•
Year 2: 200 additional sites
•
Year 3: 150 additional sites
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MARKET PROJECTIONS - Forecasted over a 5-year period
1.
Oil & Gas
2.
Mobile Broadband
Population Coverage in Area Estimates:
Overall Mobile Network Market Penetration
GiCell Take-Up Rate of Mobile Users
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3.
Machine-To-Machine
4.
Voice Subscribers
5.
Voice Revenue
6.
Subscriber Projections – All Segments
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7.
Revenue Projections – All Segments
8.
Estimated Financing Required
To remain cash flow positive at all times with a comfortable cash cushion and maximize profitability, it is
estimated that The Project will require an initial debt investment in the form of a revolving line of credit of 108
million USD, with additional facilities in Year 2 of 36 million USD and Year 3 of 2 million USD at 12% interest with
ten- year tenors. A full drawdown of those facilities will leave GiCell with a positive cash balance at all times
during the first three years of operation before becoming cash flow positive in Year 4.
9.
Profit and Loss Statement
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10.
Projected Cash Flow Statement
11.
Projected Balance Sheet
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12 │ PROJECTED NPV & IRR
Ericsson Projections
13 │ PROJECTED ENTERPRISE VALUE
This Projected Enterprise Value section is not a part of the Ericsson Report and it purely reflects GiCell’s opinion
based on the projections submitted by Ericsson above. Considering Ericsson projections, GiCell is of the opinion
that the Project’s Enterprise Value is about US$412,805,330, comprising of the NPV stated above and an estimated
terminal value of US$288,963,731. Thus the equivalent of the 33.33% of the value of the post-offer capital which
the Company intends to raise to finance this growth plan results in an estimated US$137.59m, which makes a
compelling return for an invested sum of US$39.9m over the projected horizon. This should also be considered
alongside the socio-economic impact it would have on the populace, especially the low-income earners, due to the
low cost of delivery associated with the CDMA450.
NOTE:
GiCell has the only 450 MHz spectrum in Nigeria.
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14 │ RISK FACTORS, MITIGANTS, AND SWOT ANALYSIS
Risk Factors and Mitigants
Prospective investors should consider the normal risks inherent in any start up. Investment in GiCell wireless
limited involve a certain degree of risk some of which can be identified and proactively managed while others
listed below are identified risks associated with the company and mitigating factors that would minimize their
impact:
1. Country/Political Risk
Changes in government policy may adversely affect economic development and stability in the country and
undermine the business environment.
Mitigants
th
Nigeria is entering the 13 year of uninterrupted democratic rule, the longest since independence in
1960. It has witnessed a successful civilian to civilian government transitions and the policy thrust of the
present government is not expected to differ materially from those of the last administration.
2. Regulatory Risk
Company is naturally exposed to changes in the regulatory environment.
Mitigants
The telecommunication industry in Nigeria has witnessed relatively fair stable policies and regulatory
intervention backed by the telecoms Act 2003. A continuation of this trend is expected. GiCell on its
part takes its regulatory obligations seriously and always strives to meet and exceed such statndards.
3. Operational Risk
GiCell faces competition from bigger and more established players in the telecoms sector.
Mitigants
Deregulation of the telecoms market together with healthy competition brings opportunities for an
innovative nifty player to carve a niche for itself. GiCell’s multiple licenses, the 450MHz spectrum and
new technology enables it to provide a full range of higher quality services at highly lower rates.
4. Exchange Rate Risk
Company’s business is susceptible to adverse fluctuations in the foreign exchange rate and may lead to major
losses when equipments are imported.
Mitigants
Central Bank of Nigeria is currently employing proactive and effective tools to manage the exchange
rate and has been able to hold it stable in recent years. This currency rate stability is expected to
continue. GiCell plans to source required equipments from vendors with offices in Nigeria who will bear
most of the risk.
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SWOT Analysis
STRENGTHS
1. Significantly Wider Coverage Area
The main differentiator for GiCell, the Unique Selling Point, is the significantly highly coverage offered by the 450
MHz. Wider coverage will lead to fewer sites, thus demanding significantly less CAPEX and OPEX, allowing GI-Cell
to offer competitive rates at similar service quality, enabling a speedy uptake and also using 450 Extended Cell,
coverage can go as high as up to 120km. It is projected that the 450 MHz, which is unique only to GiCell, will
reduce its CAPEX/OPEX to about 1/12th (one-twelfth) of that of its competitors.
Number of BTS required for covering a certain area:
FREQUENCY
450
800
1900
URBAN
1
2.34
11.14
SUBURBAN
1
1.97
6.78
RURAL
1
1.84
7.75
In addition, GiCell was awarded the National Unified service license by the Nigerian Communications Commission
(NCC), which includes the Digital Mobile Services, Fixed Telephony services, full International Gateway Services and
the National Long Distance Services. So the network can be deployed throughout the country, which brings about
significant potentials.
450MHz is the inherent universal coverage solution.
2. Strong Government Relationship
A. There is no doubt that any business which has the capacity to provide telecommunications to the
rural/poor communities at reduced rates would have tremendous Government support. In essence, past
records shows that GiCell was awarded the Universal Access Network Expansion Agreement and License
for the First UA Pilot Project covering the routes along Yola to Biu, Calabar to Obubra and Ilorin to
Yashikera, which was determined to be the least served area in terms of Telecommunication in Nigeria.
The project had a onetime subsidy of US$5.05 million from the International Development Associations
(IDA), a member of the World Bank Group.
B.
The Nigerian Communications Satellite Limited (NigComSat), which has just launched a communications
satellite into orbit, owns equity in GiCell and maintains a board-seat in the company. NigComSat had to
obtain a Ministerial approval to invest in GiCell in order to enable them to provide services to last mile
consumers. Since, NigComSat is a government agency; Ministerial approval was required as it is not
eligible for a Telecom License due to the deregulation of the Nigerian telecoms industry. Through this
relationship with NigComSat, GiCell can potentially provide service coverage to the most remote corners
of Nigeria at very cost-efficient rates. The combination of this relationship with NigComSat and the 450
Mhz spectrum gives GiCell a very competitive advantage in the rapidly growing Nigerian telecoms market.
3. Reliable Global Partners
ERICSSON, the world-leading telecom solutions provider will build and operate the GiCell 450 MHz Network; while,
SWEDTEL, a major international management company will develop and manage the commercial growth.
4. Significantly Lower Rates
The company is well positioned to offer significantly lower commercial rates giving it a unique competitive edge in
the market due to lower Cost of Sales as a result of the wider penetration and coverage area of the 450 MHz band.
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WEAKNESS
Insufficient project capital requirement is perhaps the Company’s greatest weakness, which it intends to address
by developing and implementing a major fund raising initiative.
OPPORTUNITIES
Untapped Niche Market
1.
Presently, there are over 40 million Nigerians currently without coverage which is a major concern to the
Government regulators. The current major operators have lined up their cell sites along major roads and cities
with no real incentive or capacity to go off road as it is not their business model to do Universal Service based
on the GSM900/1800 and CDMA800/1900 technologies. 450 MHz technology is currently the ONLY real
solution which can adequately cover these un-served areas.
2.
Today, there are approximately 3.5 million PCs operating in Nigeria, out of which over 57% lack access to the
Internet due to two primary reasons: high cost and lack of coverage.
3.
In 2010, there were over 9.8 million Internet users in Nigeria which is expected to grow to about 12 million
users by 2014. These users are currently paying exorbitant rates for their services due to the high cost of
operations incurred by their service providers.
4.
Demand is very high for Broadband Services. In 2010, there were 1.86 million broadband users and it is
estimated to increase to about 2.58 million by 2014.
5.
There are currently more than 40 ISPs offering Internet services in Nigeria, which are mostly focused on the
Enterprise Market leaving the individual commercial market untapped with approximately 100 million
potential subscribers.
6.
There is a strong global trend towards Machine-to-Machine connections, and GiCell with its unique 450Mhz is
the best suited for this opportunity. Ericsson has projected that global connections will explode to about 50
billion by 2020, with a dominant percentage composed of machine-to-machine connections. In Nigeria, border
security solutions, pipeline/reservoir monitoring, utilities remote meters monitoring are just a few of the
many emerging opportunities in the Machine-to-Machine sector.
7.
The Oil & Gas sector as well as the Maritime sector with rigs/assets/vessels as far as 50 Km offshore can ONLY
be served either by costly Satellite connections or via a more cost effective and reliable 450Mhz network with
a coverage range of 120 Km. This opens a highly potential market to GiCell. The other operators
(GSM900/1800 and CDMA800/1900) are unable to serve this market due to coverage limitations which cannot
reach beyond 15 Km in most instances. Nigeria’s oil production platforms are dominantly progressing towards
the deep offshore further beyond the existing coverage range of the other operators.
8.
Number Portability, is soon to be implemented by the NCC, which enables customers to transfer their existing
numbers to any provider of their choice. Number Portability implementation will provide low-cost providers
like GiCell with the opportunity to capture a significant market share. GiCell can offer its services at a fraction
of the current prices offered by its competitors while delivering higher service quality.
THREAT
Foreign exchange risks, if funding mix is not well articulated; and if the Treasury Department of the Company is
weak. This threat is mitigated by the engagement of Strong-Bridge LLC to manage the company; and the
retainership of MorganCapital a foremost Independent Investment banking firm, to advice on the management of
GiCell.s liabilities (currency mix, tenor-matching, weightings, etc) going forward.
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15 │ CONTACTS
BlueDyn Capital SA has been retained and appointed by the Company as the exclusive Agent for the GiCell CDMA
450 Network Project.
Please address all your enquiries to:
Mr. Reza Dari
CEO
BlueDyn Capital SA
+971 4 4532898
+971 4 4532699
+971 50 1040988
reza@bluedyn.com
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│ Fax
│ Mobile
│ E-Mail
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