Celtel: Celebrating the Exit

Dr Mo Ibrahim
Founder and Chairman Celtel

AVCA Nairobi
November 2005
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Dr Mo Ibrahim AVCA Nairobi November 2005
Celtel Summary

Celtel was formed and built by African people and raised over $400m
equity to invest over $800m in bringing communications to more than
8 million Africans.

Celtel has been acquired by MTC Kuwait for $3.4 billion in one of the
biggest corporate deals ever involving a company operating in Sub-
Saharan Africa.

This deal brings Gulf oil money to Africa and puts over $2 billion back
to the Development Institutions and venture capital funds who were
major Celtel shareholders

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel achievements

13 mobile operations with over 8 million customers

Largest footprint of any operator across Africa
Over 250 million people in licensed countries (30% of all Africans)

Only operator with full East Africa coverage

Revenue run rate of over $1 billion a year

Ebitda $250m in 2004; target $440m in 2005
Half the top management and over 98% of staff are Africans

Created Celtel as a major new brand built on the positive side of African culture

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel today

Market Leader in 10 of 13 Markets

Burkina
Faso
250m Population
Under Licence (a)
Niger
Chad US$748m 2004PF (c)
Sudan
Proportionate Revenue

8m Managed Uganda
Mobile Customers Sierra
Leone Kenya
Gabon DRC
Tanzania
US$264m 2004PF(c)
Republic of the Congo Proportionate EBITDA
Zambia
6m Proportionate
Mobile Customers

Malawi

(a) As of end of 2003 (World Bank)

(b) As of end of 2004 5
(c) 2004 Pro-Forma for the acquisition of Kencell
Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel’s Vision

‘Making Life Better’ ‘La Vie en Mieux’

• ‘Making Life Better’ is the overriding vision that drives us

• Everyone in the company contributes to making this true for all our
stakeholders

• We are driven by our commitment to achieve sustainable development of

telecommunications in Africa

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel’s Mission

‘To be the most successful

Pan-African telecommunications company’
• We are a telecommunications company

• We are Pan-African

• We want to be the most successful for our

 Shareholders
 Customers
 Employees
 Communities we work in

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Seeing opportunity

• Celtel was a pioneer in meeting Africa’s need for Telecoms infrastructure:

• When Celtel started in 1998 there were only 2 million mobile phones in
Africa.
• Now Africa is the fastest growing region in the world for mobile phones.
 Sub Sahara Africa grew 67% last year compared with 10% in W
Europe
 Last year there were more new mobile phone customers in Africa than
in North America or in Western Europe
• Today there are some 100 million
• But we have only just started: sub Sahara Africa still at 6% penetration
• All of Africa at 12% compared to 100% in W Europe

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel business philosophy

Built Celtel on a very strong set of principles and values:

• The objective of Celtel is to achieve sustainable development of telecommunications

businesses in Africa in an efficient and profitable, responsible and ethical way
• Celtel is committed to the development of Africa by ‘Making Life Better’
• Key value is integrity – Celtel demonstrates that it is possible to conduct a business across
sub-Saharan Africa that follows best business practice.
• Celtel adopts best practice for corporate governance and expects the same from governments
and partners
• We refuse to do business where transparency is inadequate

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Shareholders

• Celtel gained trust of world-class Key Shareholders

investors including significant stakes
owned by
Founder, Management and Employees
 Africa-focused investment funds
 Major development finance African Investors:
institutions
 Leading commercial private equity WorldTel Africa, Zephyr Management
groups Standard Bank

AIG Infrastructure Fund, IFC

Intl Emerging Mkts Invt Funds:

Actis / CDC, DEG, FMO

Private equity:
Bessemer, Alba, Citigroup,
Capital International etc.

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Board Members have included:

Dr. Mo Ibrahim Executive Chairman and Founder of Celtel and MSI Plc
Lord Prior Chairman of GEC until 1996;UK Cabinet Minister during Thatcher
Lord Cairns Ex Chairman of CDC/Actis
Salim Salim ex Secretary General of the OAU Prime Minister of Tanzania
Sir Alan Rudge President of Celtel and former Deputy Chief Executive BT
Sir Gerry Whent Founder of Vodafone
Jay Metcalfe Former Chief Executive of Millicom until 1997
Naushad Merali Chairman Sameer Group Kenya

Joseph Solan Represents IFC

Felda Hardymon Represents BVP and Harvard Business School Professor
Thomas Gibian Represents Emerging Markets Partnership
Jonathon Bond Represents CDC Capital Partners
Tom Barry Represents Zephyr Asset Management
Ashley Dunster Represents Capital Group

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Dr Mo Ibrahim AVCA Nairobi November 2005
Strong Corporate Governance
International Recognition

Winner of the 2004 IFC Client Leadership

Award from over 1,300 companies in their portfolio

Celtel is ‘a company that sets the gold standard for its peers anywhere in the world,
a company that is a role model for others, regardless of sector, region or country’
Peter Woicke IFC Executive VP October 2004

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Dr Mo Ibrahim AVCA Nairobi November 2005
Fundraising : equity
450.0

414.8

400.0
391.9
381.4

350.0

300.0 296.0
US$ in m illions

250.0
243.0

200.0

170.5

150.0

114.3
100.0

50.0 51.3
16.1
11.1

0.0

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Fundraising : debt

 Major problem
 Always been difficult and expensive to raise debt.
 Even for profitable, cashflow positive company
 Little opportunity to raise debt in Africa
 Holding company debt: equity ratio always <1:1
 “Excessive” equity lowered return
 Example : raised equity not debt to acquire $250m Kenya
operation

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Dr Mo Ibrahim AVCA Nairobi November 2005
Revenue and ebitda growth

Revenue & EBITDA

1200

1000

800
US$ M

600

400

200

0
1998 1999 2000 2001 2002 2003 2004 2005

revenue ebitda

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Dr Mo Ibrahim AVCA Nairobi November 2005
The Exit

We have never run Celtel “for sale”

Always long term investment perspective

Board had turned down all previous acquisition approaches

The plan was for LSE float – on schedule for April 2005 with
Goldman Sachs and Citicorp as joint global co-ordinators

Five approaches – three allowed to proceed to due diligence

Competitive process to final acceptance

Board and shareholders worked all Easter and accepted MTC

offer

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel celebration for…

Customers
8m people now have phones

Employees
Jobs: 3500 high quality jobs; some 30,000 indirect jobs

Over $700m profit to employees through the share option schemes

Staff shared the exit bonus : average 6 month’s salary

Celtel is developing a new cadre of African leaders – training the top teams
at London Business School

Celtel is are helping to reverse the diaspora of African managers

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Dr Mo Ibrahim AVCA Nairobi November 2005
… and for Governments

Celtel 2005 Proportionate

Revenue $ 1 billion Ebitda $ 440m

Capex $ 500m

Government 27% } $350m

PTT 8% } 35% of revenue straight to Government

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Celtel exit celebration for shareholders

Exit price delivered $3.4 billion to Shareholders

Development Funds $ 1.1bn (including DEG)

Private equity $ 900m
Founders and staff $ 1.4 bn
Average return on investment = 8.5 times

$2 billion is now available for re-investment in Africa

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Success for development

Mobile telecoms is a vital driver for development.

Fixed lines can never connect Africa:
less than 1% in Sub Sahara Africa 100 years after development of the phone

Economist March 2005:

“plenty of evidence suggests that the mobile phone is the technology with the
greatest impact on development. A new paper finds that mobile phones raise
long-term growth rates, and that their impact is twice as big in developing
nations as developed ones”

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Dr Mo Ibrahim AVCA Nairobi November 2005
Success for Africa

Celtel exit is excellent example of the improving investment

climate in Africa

Private capital is about risk vs. return

Returns in Africa are among the highest in the world.

Celtel exit has sparked more interest in emerging market

telecoms – including Etisalat and Vodafone investing in Africa

Africa needs more success stories like Celtel to encourage

investment

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Dr Mo Ibrahim AVCA Nairobi November 2005
 Thank you

Dr Mo Ibrahim
Founder and Chairman Celtel