Press Release
Celtel Becomes Smart Prey Rather Than Predator
Only a month ago, cellular network operator Celtel was boldly announcing plans to take over some smaller rivals to become the cellular king of the continent. Now Celtel itself is the takeover target, through a $3,4bn buyout from Kuwait's Mobile Telecommunications Company.
The deal is hard evidence that in the cellular network business only the strongest and the richest can survive.
The bad news for Vodacom and MTN, however, is that nothing much will change within Celtel, except that it now has access to deeper pockets and even more cellular expertise. MTC's financial and technical backing will make Celtel an even more ferocious rival.
Until now, Celtel's plans for African dominance have been relatively easy to dismiss. It is profitable and has a presence in 13 countries, but money was always tight. Its management skills and sound business practices had seen it repeatedly raise debt and equity funding to expand, but a buy-in from MTC should ease that pressure.
It also saves Celtel from having to go public through listings in London and Johannesburg. That risked saddling it with shareholders who had seen the rapid rise in valuations from Telkom and MTN and might have expected similar returns.
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