Lesley Stones , Information Technology Editor
4 October 2004
Johannesburg — AFRICA's third largest cellular network operator, Celtel, will seek a secondary listing in Johannesburg to back up its planned London listing, attracted by relaxed rules on the listing of foreign companies.
Celtel has operations in 13 African countries, and reported turnover of $297m and net profit of $57m for the six months ending June this year, ranking it behind Vodacom and MTN.
One analyst pegs the company's value at about 1,5bn.
Chief strategy officer Terry Rhodes said the listing would happen in the first half of next year, but it was too early to say what percentage of its shares would be floated . Rhodes said there was no immediate pressure on Celtel to raise money, but its operations in all 13 countries "are profitable, growing and hungry".
Plans for a London listing were first mooted last month, but changes in the Reserve Bank's exchange control regulations have enticed it to opt for Johannesburg, too. The new rules are designed to attract foreign companies operating in Africa to seek secondary listings on the JSE Securities Exchange SA. Foreign firms will be able to use shares to buy assets locally , and SA's institutional investors will be able to invest an additional 5% of their assets in those listings.
"We are the kind of company that these changes are trying to attract, and it's an opportunity for investors here to participate in a listed telecoms company focused entirely on high-growth African markets," said Rhodes.
"For us a listing is a logical next step now the company is established and profitable."
Celtel is not active in SA, where its bid to become the third cellular operator was trumped by Cell C. But it does want local shareholders.
Its sole South African backer is Old Mutual Asset Managers, with 1,1%. Internationally, its backers include Capital Group, Citigroup and the Africa Infrastructure Fund, while its main shareholder is chairman Mo Ibrahim, with 21,7%.
A London listing made sense because, since its launch in 1998, Celtel had raised $450m in equity, mostly from Europe and the US, said Rhodes. At the same time it wanted to tap into African investors through the JSE.
"We think there is investment money here looking for a well run, profitable African business to invest in and they are not that easy to find," he said.
Analyst Neil Wedlake of Morgan Stanley said the JSE listing probably made more sense than a London listing. Celtel could prove a difficult story to sell to UK investors as it was small and operated in very diverse markets, making it tough to assess.
As a small company it may receive less attention from analysts than it expected, Wedlake said although investors willing to do their own research may find it a worthwhile bet.
A JSE listing made sense, because its natural investor base was in Johannesburg. "Investors are looking for more diversification out of SA, but still in a region they understand," said Wedlake.
The company will use the money raised by issuing fresh shares to bid for new cellular licences or acquire stakes in existing networks .
Rhodes said the sub- Saharan countries where Celtel chiefly worked had a cellphone penetration of just 2,7%, presenting massive growth opportunities.
Celtel currently serves about 4-million customers of the 245million people who live in the countries where it operates.
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