Kuwaiti cellco MTC-Vodafone is to buy pan-African mobile holding company Celtel International for USD3.4 billion in cash. Celtel CEO Marten Pieters confirmed that a number of parties had approached the company following an announcement last September that it was planning to list on the London Stock Exchange. That plan has now been scrapped following the acceptance of the bid from MTC. The takeover comes as good news for existing Celtel shareholders; the amount paid is significantly higher than the ‘above USD2 billion’ that the cellco had hoped to raise from the London IPO. Under the terms of the deal, MTC will pay an initial USD2.84 billion for 85% of Celtel, with the remaining 15% to be purchased within two years for a further USD520 million.
Celtel was founded in 1998 by Anglo-Sudanese businessman Mohamed Ibrahim, former technical director of BT Cellnet (now O2). It has been profitable since 2003 and last year had pre-tax income of USD186 million on revenues of USD714 million. In the past twelve months subscribers doubled to just over five million in the 13 countries in which the company has operations (Burkina Faso, Sierra Leone, Chad, Uganda, Democratic Republic of Congo, Republic of Congo, Malawi, Zambia, Niger, Kenya, Sudan, Tanzania and Gabon).
By market capitalisation MTC-Vodafone is the second largest group in Kuwait, weighing in at USD7 billion, and in 2004 it made a profit of USD408 million on the back of a 23% rise in revenues to USD1.1 billion. The company’s 3.4 million customers are spread across operations in Kuwait, Jordan, Lebanon, Iraq and Bahrain. The acquisition of Celtel provides huge growth potential for MTC: cellular penetration is much lower in countries in Africa than it is in the Middle East; in ten of Celtel’s 13 countries of operation penetration is less than 5%.