Celtel still keen on SA
CELLULAR network operator Celtel — the main regional rival to MTN and Vodacom — is still hankering to enter SA and may do so in partnership with a nontraditional player.
The changing regulatory landscape in SA should soon see several internet service providers and other hi-tech companies granted licences to build their own voice and data networks, and Celtel could team up with one of those players.
“We are planning on getting into SA,” a Celtel insider said this week. Since the market is dominated by the unassailable MTN and Vodacom, that restricts Celtel either to making a play for Cell C or making a back door entry with a company bidding for a licence to construct its own network, such as Altech, Internet Solutions or Vox.
Celtel was bought in 2005 for a hefty $3,4bn by the Middle East operator Zain, and its operations in 14 African countries are being rebranded to trade as Zain.
Zain Africa’s CEO, Chris Gabriel, would not be drawn on how determined it is to enter a market already nearing saturation, but said “if an opportunity arises in SA” it would be assessed, and that included looking at the different types of licences being issued.
“We are looking at fixed- mobile technologies as well as purely mobile technologies and if an opportunity presents itself we’ll look at it.” He would not say whether Celtel was already in discussions with potential partners. “It’s a confidential issue and I don’t want to prejudice any potential negotiations,” he said.
Another option is for Zain to throw its lot in with Mvelaphanda, the black investment group bidding a rumoured R90bn for Telkom’s fixed-line assets.
Zain’s support could prove a trump card for Mvela, since its offer for the fixed-line business is dependent on Telkom shedding its 50% stake in Vodacom. That would leave Telkom without a mobile partner at a time when offering both fixed and mobile services is crucial. If Zain stepped into the breach it would give Telkom instant access to mobile skills and the deep pockets of the Kuwait based operator. Telkom would also find the idea attractive as it is eager to take its fixed-line services further into Africa, and Zain already operates in 14 African countries as well as eight in the Middle East.
Gabriel’s next target its to enter three more African countries within a year, and he is assessing several opportunities. Some new deals were close to being signed, he said.
The moves chiefly involve buying out existing players, though it would start green fields operations if it won new licences in some countries.
“These negotiations are long and protracted. They involve existing shareholders and in some cases governments and regulators,” he said.
Its preference is to enter countries contiguous to those where it already operates, so it can introduce its One Network scheme of cross-border roaming without charging customers a roaming fee. That advantage has helped its networks sign up and retain more customers in many countries, including businesses.
The Zain group now serves 50,7-million customers, up from 32-million a year ago, and its target is to more than double that by 2011. This month the group reported earnings of $3,49bn for the first half of the year, up 26% from the first half last year.
But net profit was only 7% higher at $551m, caused by spending more on its expansion in Africa.
Its goal is to become one of the world’s top 10 most profitable telecoms companies by 2011, and the next step will be to raise about $4,4bn through a European listing early next year.
Gabriel said there was still no decision about which stock exchange to list on. That would be influenced by the appetite for telecoms stocks.
Although Zain has the cash to fund near-term expansion plans, its objective of world domination needs access to the kind of cash that only a listing can provide.
It is already the fourth largest in geographic spread, but not by revenue, as it serves many large but poor economies.
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