Its NaaS model is estimated to generate gross revenue for the Company of up to CAD$500 Million during the term of the agreement commencing February 5, 2021. Under the terms of the agreement with Orange DRC, NuRAN is partnering with an ecosystem of partners for the purpose of constructing and operating 2,000 new NuRAN towers over the next 40 months throughout the Democratic Republic of the Congo (DRC) in Central Africa to meet pent-up demand, with a particular focus for rural communities with populations around 5,000.
“We are extremely pleased to enter into this agreement with Orange DRC. This contract is in line with our strategy to expand the NAAS business model across Africa. This is our second significant contract in Africa and with Orange after having already previously announced our agreement with Orange Cameroon SA. This contract further demonstrates the large demand from Mobile Network Operators (MNOs) for this type service and revenue model as well as improving the partnership with Orange. Based on our estimates the 2,000 towers will provide 2.75G connectivity to up to 10 million people, or 11.5% of the DRC population, that currently have to travel just to make a phone call.”Francis Letourneau, CEO of NuRAN
The towers fall into one of four categories depending on population density and coverage requirements. NuRAN’s technology, which won the GSMA Connected Society Innovation Fund for Rural Connectivity in 2020, uses a carrier-grade GSM base station powered by solar as part of a small-footprint (3 meters x 3 meters x 15 meters tall) remote tower.
“The social and environmental impact as well as our commitment to sustainable development embodies NuRAN’s mission and vision to connect the world, one connection at a time. This is a major turning point for NuRAN” added Francis.Francis Letourneau, CEO of NuRAN
The contract has a minimum term of 10 years for each site built by the Company. Each site consists of the installation by NuRAN and its partners of its Networking equipment as well as antennas, cabling, solar power systems, towers and related installation services. The agreement features a revenue sharing structure including a minimum guaranteed monthly fee per site built for the first five years of the agreement which is intended to partially cover the operating and financing costs.
Upon conclusion of the initial 40 month term of the agreement and once all sites are fully operational, gross revenue is expected to be over CAD$40 Million per year, with expected EBITDA (earnings before interest, taxes, depreciation and amortization) of over 50% for the local operating company, which is a 100%-owned subsidiary of NuRAN formed for the purpose of the agreement with Orange DRC.
NuRAN agreed to the delivery of 2,000 turnkey sites over the initial 40 month term of the agreement. NuRAN has established 4 different site categories to support multiple population densities and coverage patterns. Once fully operational, the network will have the capacity to connect close to 10 Million people.
Orange DRC has agreed that during the term of the agreement to, among other things, provide all the necessary support services including: providing usage rights to the frequencies assigned to it and over which NuRAN’s equipment may be broadcast; assist in obtaining the necessary site construction permits; make available sufficient floor space, power and cooling for NuRAN’s gateway equipment at no expense to NuRAN; assist NuRAN with the interconnection work and integration and inter-working testing of the Gateway equipment; configure the Core Network and related equipment (hardware and software) for optimal Site performance; and assist with testing of equipment.
NuRAN has agreed to ensure that during the term of the agreement the activities of distribution and resale of mobile devices, SIM cards, recharge cards, and/or any other equipment or service necessary for subscribers to use the mobile services of the NuRAN/Orange DRC sites, will be managed by a local organization. The parties agreed to enter into a distribution contract within 3 months after the start of the partnership to govern the terms of the proposed distribution and resale activities.
The services initially offered by the Company are based on 2.5G network services and Orange DRC may during the term request a site upgrade in order to deploy internet services requiring a capacity greater than that offered by 2.5G (i.e., 3G, 3.5G and/or 4G).
The agreement is subject to obtaining the necessary project financing for the buildout and operation of the sites. In connection with the project financing for the agreement with Orange DRC, the Company has executed a term sheet with a local DRC Bank for the proposed capital expenditures for the site buildout. The financing is subject to the entry into definitive agreements for the project financing with the lender.
The agreement may be terminated by either party in the event of a material breach, force majeure events or change in law subject to certain cure periods.
Orange S.A., which pioneered the ESCO model in Africa, has a presence in 14 Sub-Saharan African markets. By expanding mobile coverage into previously uncovered rural areas and partnering with Orange, NuRAN’s NAAS service has the added benefit of meeting the United Nations Sustainable Development Goals. The new agreement with Orange DRC is the second agreement between Orange and NuRAN in the past three months. In October, Orange and NuRAN entered into their first NAAS contract with Orange Cameroon for the construction of up to 272 sites in Cameroon.