Africa's Celtel Snags Development Funds
Pan-African carrier Celtel International B.V. has been shelling out cash left and right to build mobile networks across the continent, and now it's getting help from a group of development banks to finance its expansion.
The International Finance Corp. (IFC), the private sector arm of the World Bank, said Wednesday that it's investing $160 million in Celtel as part of a $320 million loan package put together with commercial banks and other financial institutions. (See Celtel Gets $320M.)
According to the IFC's Website, Celtel's subsidiaries in the Democratic Republic of Congo, Sierra Leone, Uganda, Madagascar, and Malawi were chosen to receive the money because "these are post-conflict and frontier countries... where there is significant unmet demand and potential growth."
The five countries, it adds, are "defined by low penetration rates, obsolete and inadequate fixed-line networks, lack of standard regulations, underdevelopment, high tariffs and low digitization."
The project aims to "help modernize telecommunications technology in some regions, while in other regions it would help promote competition by making cellular communications more affordable and available to larger segments of the population."
The bulk of the IFC's money, $75 million, will go to the Democratic Republic of Congo, which, like Sierra Leone, is recovering from civil war. Each country will receive matching funds from the other participating lenders, so that the package breaks down as follows:
- Democratic Republic of Congo: $150 million
- Sierra Leone: $50 million
- Madagascar: $50 million
- Uganda: $40 million
- Malawi: $30 million
The money will also allow Celtel to refinance some shareholder loans to fund expansion elsewhere in the sub-Saharan region. Celtel, owned by Middle Eastern operator Mobile Telecommunications Co. (MTC) , has operations in 14 African countries.
Separately, the Development Bank of Southern Africa (DBSA) is investing $13.5 million in a five-year project to expand Celtel's infrastructure in Zambia, where it's the largest operator. The five-year project will extend the carrier's network coverage to 100 towns that do not have access to telephones, and Celtel expects to spend $105 million on the first phase.
Celtel is also continuing to pump cash into Nigeria, Africa's fastest-growing mobile market. According to African media reports, Celtel Nigeria COO Lars Stork told a press conference Monday that the operator has spent $69 million on its network buildout over the last year, and plans to invest an additional $1.5 billion this financial year to extend coverage, improve call quality, and roll out 3G services.
As well as deploying new infrastructure, Celtel is introducing new service packages. The carrier announced last week that its "borderless" One Network -- which allows customers to use their phones abroad as if they were at home, with the same services and without roaming charges -- has been extended from Kenya, Tanzania, and Uganda in the East to include the Republic of Congo, Gabon, and the Democratic Republic of Congo in Central Africa. (See Celtel Expands One Network.)
MTC acquired an 85 percent stake in Celtel in 2005 and picked up the remaining 15 percent last month for a total of $3.4 billion. It has taken the operator on a major expansion kick, investing $10 billion in the past two years. Celtel had 18.9 million subscribers across Africa at the end of the first quarter, up from 5 million in 2005.
— Nicole Willing, Reporter, Light Reading