UK-based Gateway Communications, a pan-African satellite and telecoms company, has secured US$37.5 million of funding which will allow it to take over GS Telecom, thereby beefing up its multinational customer base and gaining a foothold in the vibrant Nigerian telecoms sector.
Gateway, which said it would fund the deal partly through cash and partly from the US$100 million it raised last year with a high-yield bond issue, already connects about 40 mobile phone networks across Africa through more than 400 satellite network links to around 140 earth stations.
Gateway's core business lies in offering satellite connections for mobile phone operators across African - indeed, this acquisition will boost its subscriber numbers in no fewer than 37 African states. Satellite technology is Gateway's chosen method of fighting Africa's greatest communications challenges: under-developed infrastructure, enormous distances and, even today, legacy networks from colonial times that can mean a call from one African country to another being routed via Europe.
Nigeria has been a phenomenally fast growing market for the last five years - almost certainly, the fastest in Africa. Hence Gateway's enthusiasm to exploit Africa's healthy demand for mobile phones, the latter aided in turn by the continent's decaying fixed-line structures. There are clearly opportunities in a region where only 20% of the population has a mobile phone.
GS Telecom, which has the major presence in Nigeria so attractive to Gateway, has itself been supplying services to oil groups Total, Exxon and Mobil, as well as Coca-Cola, Citi, Standard Chartered Bank, MTN and Celtel. Of GS Telecom's 216 employees, 150 work from Nigeria.
Last year Gateway purchased Link Africa, the former international carrier services unit of Kuwaiti-owned African mobile group Celtel.
Julian McIntyre, President of Gateway Communications, told Reuters in a recent interview: "I believe our business will continue to grow very rapidly...and we will look for the best kind of finance to support that growth - be that via the debt or equity markets.
He also commented: "This is a substantial acquisition which marks a further step in our strategy to consolidate our leading position in the rapidly growing African communications market. We are committed to improving the value proposition that we can offer to our customers, and the customers of GS Telecom, through providing a broader service range, greater geographic coverage and excellent local and international support capabilities. We look forward to working with the GS Telecom management team and staff to grow the enlarged group."