iQSTEL Closes First Tranche of Financing of Up to $3 Million for Ultranet Deal
Key Facts
iQSTEL announced the closing of the first tranche of financing through non-convertible promissory notes, saying the move supports its plan to acquire a controlling stake in Ultranet. The financing has a maximum of $3 million, but the announcement did not say that the full amount had been raised or disbursed. The deal targets a 51% stake in the Accra-based company, which provides international telecom and messaging services in six West African markets. iQSTEL said it expects Ultranet to make the company cash-flow positive on a consolidated basis after the deal is completed. It also expects an annual contribution of about $9 million in adjusted earnings before interest, taxes, depreciation and amortization. The deal remains planned, as a share purchase agreement has not yet been signed.
The notes carry an annual yield of 18%, payable monthly, and are non-convertible into shares. Principal is scheduled to be repaid in four equal semiannual installments, each representing 25% of the principal. The financing therefore combines a set interest cost with a principal repayment schedule over two years. It supports the proposed purchase of Ultranet, but does not establish that the full deal consideration has been secured. In the binding memorandum of understanding announced in June, total consideration for the 51% stake was estimated at about $17.6 million. This included up to $10.6 million in deferred payments or payments contingent on achieving earnings targets.
The June memorandum included initial cash payments of $7 million, alongside deferred or contingent payments of up to $10.6 million. It tied those payments to net income targets of $4.5 million in the first year and $9.5 million cumulatively during the first two years after closing. These terms allow the seller's potential proceeds to be compared with Ultranet's future financial performance, but they remain part of the memorandum of understanding. In a June filing, iQSTEL estimated that the deal would add about $130 million to annual revenue and about $4.5 million to net income, based on audited financial statements for fiscal year 2025. These estimates apply to Ultranet's results on a full-year basis, while iQSTEL plans to buy 51% of it. The target's reported figures therefore do not mean that all of its revenue or profit would accrue to iQSTEL.
Ultranet operates in Nigeria, Ivory Coast, Ghana, Burkina Faso, Mali and Senegal, and provides international telecom and messaging services. This places the target within a regional business spanning six markets, while iQSTEL's plan is to add its operations to the group through a controlling stake. iQSTEL said the expected acquisition would support access to Ultranet's base of telecom operators through digital services, alongside the financial impact it expects. The effort comes as the company's second-quarter 2026 filing cited recurring operating losses and negative operating cash flow. In that filing, it said these conditions “raise substantial doubt about the company's ability to continue as a going concern.” The warning makes the expected shift to positive cash flow a central part of the rationale for the deal announced by the company.
The announced deal timeline has changed from the June memorandum of understanding. The original memorandum targeted signing a definitive agreement within 60 days, with completion expected in the third quarter of 2026. The October announcement said iQSTEL expects to sign a share purchase agreement in November 2026 and is targeting a deal closing in mid-first quarter 2027. Closing remains subject to customary conditions, including completion of due diligence and receipt of regulatory approvals in Ghana and Nigeria. The conditions also include signing final documents, conducting a Foreign Corrupt Practices Act audit and obtaining a third-party valuation. The company did not provide a specific timetable for completing these requirements in its announcement, while mid-first quarter 2027 remains the targeted closing date.