Celtel reports 'exceptional' growth: year-on-year, Celtel has doubled its African mobile customers--and seen revenues grow by nearly half. Silvio Gikandi reports.

Celtel International, the leading pan-African mobile communications group, with over four million customers in 13 countries, reported exceptionally strong growth in the six months to June 30, 2004 (H1). A substantial development of the business followed the acquisition of KenCell in Kenya.

Celtel reported a 47% increase in revenues to $297m, up from $202m for the same period last year--and a 111% increase in total managed customers, now more than four million subscribers.

Net profit after tax was $57m (including $27m exceptional profit) compared to $13m in H1 2003. The average monthly revenue per user was $22.5--slightly lower over the six months, compared with the $25 achieved in H2 2003 due to the negative impact of the consolidation of KenCell's subscriber base.

Capital expenditure for the six months totalled $118m compared to H1 2003 capital expenditure of $32m. Celtel also invested $250m to acquire the majority stake in KenCell.

The Kenyan market completes the group's geographical coverage in East Africa and, importantly, makes Celtel the only mobile operator with the opportunity to develop an East African network covering Kenya, Uganda and Tanzania.

Marten Pieters, Celtel International's chief executive officer, says: "The KenCell acquisition was a critical strategic development which gave us a quantum leap in user numbers to four million. Celtel is now the leading operator in East Africa and in sub-Saharan Africa as a whole."

Pieters was also able to report that the new Celtel branding has been rolled out in 10 of the 13 countries where Celtel International operates, commenting: "We have continued to achieve strong organic growth, with a 63% increase in the number of users in the existing businesses. During the half year we made a strategic investment of $118m in infrastructure to grow our networks and aggressively promoted our new brand."

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The group's operating cash flow was $75.8m for the half year, up 196% compared with H1 2003. Given that over 70% of revenues are linked to hard currencies, CFA (the euro-fixed Franco-African currency) or US dollar, the effect of currency fluctuations has been minimised. The customer base remains predominantly pre-paid with 95% of customers using 'top-up' cards.

During the six months the group continued to receive strong support from investors and raised a total of $79.9m in new equity. Additional capital was raised from the sale of investments including its minority stake in China Resources Peoples Telephone in Hong Kong and part of a minority stake in Vodafone Egypt. The group realised $55.2m in total from these asset sales in the first half of this year.

Africa continues to be the fastest growing mobile telephone market in the world. Mobile subscriber numbers have increased on the continent by over 1,000% between 1998 and 2003. However, penetration levels remain low with only 6.2% cellular penetration against world average of 22%, and the market remains both fragmented and challenging.

Pieters says that he would be disappointed if he did not see a 10% cellular penetration figure with a few years. "The focus over the next period is on continuing to build scale in the markets where Celtel operates," Pieters reported, adding that the group will also continue to actively pursue new licence opportunities.