DRC operations
DRC is the largest country by area in the sub-Saharan Africa and just second after Algeria in the whole Africa. It’s also the 11th largest country in the world. With a population of around 105 million it’s the third most populous country in Africa. (The Economist Intelligence Unit, 2021) Population growth rate has been above 3% annually (Data Commons, 2021) for the last 15 years and is predicted to continue in the coming years.
In 2019 it’s GDP has amounted over $50 billion and has been climbing since 2002 reaching annually growth rates of up to 10% (Data Commons, 2021). Future predictions show continuous uptrend with estimated 3% GDP growth in 2022 (Trading Economics, 2021).
Operations in DRC are already in the funding phase as it is of strategic importance to cover DRCs capital city Kinshasa because of its size and geographical position. The city is constantly growing with a population of over 15 million people in 2021. Its terrain offers best performance for K3 technology with an easy expansion option to Congo Brazzaville.
There are 3 initial base stations planned in Kinshasa at:
- Binza Pigon
- Mont Ngaliema
- Limete Tower
This setup will allow coverage of about 90% target areas within Kinshasa.
After setting up base in Kinshasa, expansions are planned for Lubumbashi, Kisangani, port and trade cities of Matadi, Boma and Moanda, and mining zones in Mbuji-Mayi.
Figure 30 Kinshasa coverage map
Figure 31 DRC expansion plan
High level Economics:
- Expected to yield EBTIDA margins of about 50% to 60%
- Profitability is reached with only ~3,000 customers
- Break-even time per customer is 2-4 months
90,000 customers in DRC will yield an entity value of USD ~675M (90,000 customer equates to about 20% of the addressable market in Kinshasa)
Profit and Loss Statement
| Period | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Total Number Of Users by Period-End | 5,201 | 19,568 | 39,541 | 64,771 | 90,000 |
| Total Number Of Base Stations | 2 | 5 | 9 | 14 | 19 |
| Revenues | |||||
| Service Fee | 1,344,098 | 19,615,757 | 44,396,684 | 81,363,085 | 120,721,028 |
| Discount/Free trials | (352,609) | (982,990) | (1,366,595) | (1,726,226) | (1,726,226) |
| Connection Fee | 656,970 | 1,814,750 | 2,522,945 | 3,186,878 | 3,186,878 |
| Total Revenues | 1,648,460 | 20,447,517 | 45,553,034 | 82,823,738 | 122,181,681 |
| Total Direct Cost of Sales | 1,749,443 | 5,779,633 | 11,034,718 | 17,812,207 | 24,123,583 |
| Total General & Admin Costs | 1,894,292 | 3,902,367 | 6,498,818 | 10,240,716 | 13,636,687 |
| EBITDA | (1,995,275) | 10,765,517 | 28,019,498 | 54,770,814 | 84,421,411 |
| Terminal value at 8x EBTIDA multiple | 675,371,286 |
Table 9 DRC operations Proffit and Loss Statement
Economics currently ignore the upside potential from:
- Expansion to Phase II markets (named above)
- Targeted enterprise solutions DRC along with the broadband offerings (IT Security services, Data center management, network solutions, and others)
- Lower income and mass-market solutions already in pilot stage in Sierra Leone (public Wi-Fi mesh zones)
We intentionally remain conservative in our projections. In Kinshasa alone, indications point to a much great growth potential. With 15 million people in the city, a high cost of living for western standards (>$3,000 rent a month for a 2-bedroom apartment) and a shocking lack of true broadband and modern entertainment services, the market is in desperate need for modern standards.
Detailed business plan is available for interested, registered investors on request.