Portfolio company
Celtel |  |
|---|
Company website | www.celtel.com |
Business sector | Business services |
Country of operation | pan Africa |
Market | Africa |
Investment status | Realised portfolio |
Investment type | Growth capital |
Date of original investment | 1998 |
Date of exit | 2005 |
Exit method | Trade sale |
Office | London, United Kingdom |
Background
Celtel (formerly MSI Cellular) builds and operates world class telecommunications networks that deliver reliable and competitive services in Africa. The company was formed in 1998 by Mo Ibrahim at the time when the telecommunications sector in Africa was about to undergo widespread deregulation and liberalisation, including the licensing of mobile services to private operators. The poor performance of fixed-line services in much of Africa presented an opportunity for rapid growth in mobile service-provision.
Celtel now provides mainly cellular (GSM) network services across Sub-Saharan Africa, managing 14 telecoms operations (13 GSM, 1 fixed line) in 13 countries and, in addition, has interests in internet and long-distance services.
Their needs
Celtel saw an opportunity to develop a pan-African mobile network pending the deregulation of the telecommunications sector in Africa. Celtel was seeking capital to acquire mobile operator licenses across sub-Saharan Africa, and to set-up and launch mobile network services. The company needed a partner who could provide long-term finance, work closely with them to negotiate the political landscape in which the licenses for mobile operators would be auctioned, and provide strategic input to help establish a major pan-African telecommunications company.
Our solution
Actis saw the potential for Celtel to become a key player in the African mobile telecommunications space, and recognised the talent and potential of Celtel's management team to make it happen.
In 1998 we committed US$22.5 million start-up capital to fund Celtel's development, and since then we have participated in three further rounds of expansion capital to fund and support the company's growth and execution of its long term business plan.
Celtel has outperformed all expectations, growing revenue in excess of 115% per annum, establishing the company as the largest African mobile operator outside South Africa. Since its start-up it has moved from a standing start to providing coverage for 30% of Africa's population and in so doing has transformed access to telephony for more than five million customers in a continent characterised by poor communications.
Actis's added value
Our approach to investing in Celtel was that of a long-term strategic partner. We provided start-up capital to develop the business right at the beginning, and we have been involved actively in ensuring the company's continued success.
One of the key factors that enabled Actis to contribute positively to the development of Celtel is our extensive network of contacts across Africa in both the public and private sectors. We continually leveraged this network to provide support with license bids and operational issues, identify new investment and expansion opportunities, potential employees, local partners, and potential new suppliers, some of which were other Actis investee companies.
We provided on-the-ground support to Celtel in its bid for Kencell, and injected additional funds to support that bid. Celtel acquired a controlling stake in Kencell despite keen competition from one of Celtel's major competitors.
Actis has been instrumental in introducing potential new investors to the company, in particular in connection with Celtel's debt-raising activities, and we have even seconded a member of our staff to support Celtel's in-house corporate finance team.
Celtel has developed from a start-up with an ambitious vision to become a major player in the African telecommunications market. Actis has been an integral part of that journey and we continue to support Celtel in its mission to become Africa's leading mobile telecommunications operator.
Actis, the largest shareholder other than Dr Mohamed Ibrahim, the Chairman and founder, exited its investment following MTC's acquisition of Celtel in May 2005. MTC is a leading mobile operator in the Middle East which was looking to broaden its footprint. The backing of MTC will support Celtel's aim of becoming the leading mobile operator in sub-Saharan Africa.