Kuwaiti mobile phone operator MTC broke into Africa on Tuesday, snapping up third-ranked Celtel for about $3.32 billion and fuelling bid hopes for African rival MTN. Kuwait's Mobile Telecommunications Co (MTC) said on Tuesday it would buy 85 percent of Dutch-based Celtel immediately and the remaining 15 percent within two years in an all cash deal to expand into fast-growing Africa from the Middle East.
"Together, MTC and Celtel will leverage the strong synergies, shared cultural values and heritage which exist between the Arab World and Sub-Saharan Africa," MTC Vice Chairman and Managing Director Saad al-Barrak said.
Celtel promptly abandoned its plans for a market debut in London and possibly Johannesburg in the first half of this year - while speculation mounted that South African rival MTN could also be up for grabs as foreign players seek to tap into growth in Africa.
At about 5 times revenues and around 20 times earnings, analysts said MTC had paid a solid premium for Celtel - and that this could bode well for MTN shareholders if Africa's biggest mobile operator does fall prey to predators from abroad.
"MTN is definitely becoming a take-over target as it becomes increasingly clear that the Europeans and Arabs are interested in Africa," said one Johannesburg-based telecoms analyst.
The deal propels ambitious MTC, which has about 3.2 million customers across Kuwait, Jordan, Lebanon, Iraq and Bahrain, into the international league - pipping smaller local rival National Mobile Telecom Co, which has about 2.65 million subscribers in the Middle East and North Africa.
Celtel, which has 5.2 million customers in 13 countries in sub-Saharan Africa and which posted a pretax profit of $186 million on proportionate revenues of $714 million last year, has been relying to date mainly on European and American funds to expand in one of the world's fastest-growing cell phone regions.
But the MTC deal could allow the group to continue buying companies or licences in potentially lucrative new markets such as Angola, Ivory Coast, Ghana and Nigeria.
Celtel's Chief Executive Marten Pieters told Reuters the company had attracted interest from a handful of potential bidders since it announced plans to list last year.
But he said Celtel had agreed to MTC's offer partly because of the price and also because MTC would run Celtel as a separate unit and not change its corporate structure, which includes its Dutch headquarters, or brand.
"We have been talking to a few interested parties. In the end, the MTC offer was superior," Pieters told Reuters by telephone from Amsterdam airport.
Celtel is owned by investors including Anglo-Sudanese businessman Mohamed Ibrahim - who will stay on as a director - the Africa Infrastructure Fund and US venture capital firms.