Celtel doubles African mobile customers in H1 and revenues grow 47%

Celtel International, the leading pan-African mobile communications group with over 4 million customers in 13 countries, reports strong organic growth in the six months to 30 June 2004 and substantial development of the business following the acquisition of KenCell in Kenya.

• 47% increase in revenues to $297 million (H1 2003: $202 million)
• 111% increase in total managed customers to 4 million
• EBITDA increased 57% to $96 million (H1 2003: $61 million)
• Net profit after tax was $57 million (including a $27 million exceptional profit)compared to $13 million in H1 2003
• Monthly average revenue per user of $22.5
• Capex for the six months totalled $118 million (H1 2003: $32 million)
• Invested $250 million to acquire majority stake in Kenya's mobile network operator, KenCell
• New Celtel branding rolled out in 10 of the 13 countries

All financials are proportionate (aggregated on the basis of proportionate equity ownership and excluding passive investments) and include one month's contribution from KenCell, acquired in May. Total managed customer figures include 100% of all operations where Celtel International has operational management.

Marten Pieters, Celtel International's Chief Executive Officer, commented:

“We have continued to achieve strong organic growth with a 63% increase in the number of users in the existing businesses. During the half year we made a strategic investment of $118 million in infrastructure to grow our networks and aggressively promoted our new brand.
“The KenCell acquisition in May was a critical strategic development which gave us a quantum leap in user numbers to 4 million. This key licence consolidates our position in the East Africa region and we have already identified network expansion and development opportunities for these markets.
“Celtel is now the leading operator in East Africa and in Sub-Saharan Africa as a whole.”

Results

The Group performed strongly with revenues in the six months to 30 June 2004 up 47% to $296.5 million, up from $202.0 million on a proportionate basis. This performance was largely due to 63% organic growth in the total number of managed customers in existing operations in the six months to June 2004.

Revenues also include one month's contribution from KenCell, Kenya's major mobile network operator, acquired at the end of May. KenCell significantly increased the number of mobile customers for the Group, pushing total managed customers over the four million mark at the half year, 111% up compared with the previous year (H1 2003: 1.9 million). On a proportionate basis mobile customers were 2.7 million for the Group at the end of the first half, a 108% improvement on H1 2003.

Monthly ARPU (average revenue per user) was lower, at $22.5 over the six months compared with $25.0 in H2 2003. The consolidation of KenCell had a negative impact on the average.

Actual proportionate EBITDA was $96.0 million, a 57% increase (H1 2003: $61.2 million) with EBITDA margins improving to 32.4%, from 30.3% in H1 2003.

The Group showed a healthy net profit after tax of $56.8 million, compared to $12.6 million in 2003. This includes an exceptional profit item of $26.6 million on the sale of some non-core telecommunications investments.

Operating cashflow was $75.8 million for the half year, up 196% compared with H1 2003. Given that over 70% of revenues are linked to hard currencies, CFA (the Euro-fixed Franco-African currency) or US dollar, the effect of currency fluctuations has been minimised. The customer base remains predominantly pre-paid with 95% of customers using ‘top-up' cards.

Capital expenditure in the first half was significantly higher than last year at $117.5 million (H1 2003: $32.3 million), as network development and expansion accelerated to meet customer demand.

During the six months the Group continued to receive strong support from investors and raised a total of $79.9 million in new equity. Additional capital was raised from the sale of investments including the minority stake in China Resources Peoples Telephone in Hong Kong and part of a minority stake in Vodafone Egypt. The Group realized $55.2 million in total from these asset sales in the first half.

The Group continues to access local funding and recently completed a $6.6 million debt refinancing in Gabon.

Over the six-month period gross debt increased by $32.0 million to $269.8 million as a result of additional acquisition finance raised for the KenCell acquisition, although this has been offset by some debt repayment and favourable debt restructuring. Net debt increased from $105.4 million at the end of 2003 to $228.4 million as at 30 June 2004.

KenCell

The KenCell acquisition was the single most significant achievement in the first six months this year. The transaction, which completed on 26 May, involved investing US$250 million to acquire 60% of the equity in KenCell as well as taking over shareholder loans and growing the business.

For Celtel, this was a significant step in terms of customer numbers and strategically important since it extends the Group's reach into the region. The Kenyan market completes the Group's geographical coverage in East Africa and importantly, makes Celtel the only mobile operator with the opportunity to develop an East African network covering Kenya, Uganda and Tanzania.

Celtel welcomed a number of new employees to the Group with this acquisition. At the 30 June the number of employees in managed mobile operations was 3,341 (31 Dec 2003: 2,450). KenCell appointed a new managing director to oversee the integration of KenCell into the Group, whilst retaining the majority of the existing management team.

Strategy

Africa continues to be the fastest growing market in the world as confirmed by latest ITU statistics (African Telecommunication Indicators 2003). Mobile subscriber numbers have increased on the continent by over 1000% between 1998 and 2003. However, penetration levels remain low with only 6.2% cellular penetration against world average of 22% and the market remains both fragmented and challenging. In Sub-Saharan Africa, where Celtel operates, penetration levels are estimated by the ITU to be even lower, averaging 2.8%.

The focus over the next period is on continuing to build scale in the markets where Celtel operates. The Group will also continue to actively pursue new licence opportunities, participating in bids or by acquiring existing operators as demonstrated by the recent acquisition in Kenya. As was the case in Kenya, some European operators are refocusing on home markets resulting in consolidation opportunities in the market.

Since its inception in 1998 Celtel has invested over $850 million in African telecommunications. Celtel is now the leading mobile brand in 10 of the 13 countries where it operates. This ongoing investment in the expansion of Celtel's network and more recently the re-launch of the Celtel brand provides an excellent platform for expansion.

Celtel is uniquely positioned to grow rapidly across the continent as the advent of mobile communications changes the dynamic of African communities. Even a small percentage improvement in mobile penetration translates to significant growth for Celtel and the Group is confident that rapid growth will continue.

Operations

Celtel operates in Burkina Faso, Chad, Democratic Republic of Congo, Gabon, Kenya, Malawi, Niger, the Republic of Congo, Sierra Leone, Tanzania, Uganda and Zambia. Celtel is a major shareholder in Mobitel, Sudan's leading mobile network operator. It also manages the major fixed-line operation in Tanzania.

During the first half of 2004 Celtel was relaunched as a unified brand in 10 of the 13 countries as well as at Group level. Celtel has the unique opportunity to become the most successful truly pan-African brand and is one of the fastest growing brands in Africa.

Following on from the launch of the new identity and brand promise “making life better”, product and service innovations that demonstrate fulfilment of the brand promise have been launched and will be progressively rolled out across the networks.

Commercial prepaid roaming was launched in both the Democratic Republic of Congo and the Republic of Congo (Congo Brazzaville) during the half year. Customers from the Congo can buy pre-paid roaming services in either Celtel market without having to top-up their domestic account.

Celtel has made it easier for customers to stay on its network by extending the “validity” period for pre-paid customers. Dynamic Validity, which allows prepaid users to stay in the Celtel network indefinitely provided they use their phone at least once every 90 days, was launched across all countries with excellent consumer response. The Group also introduced an alternative to “top-up” cards (or “scratch” cards as they are known locally). Electronic airtime distribution was launched in Tanzania and will be rolled out in the fourth quarter. The point of sale electronic device removes the need for the “top-up” card distribution.

Key Performance Indicators

*All financials are proportionate (aggregated on the basis of proportionate equity ownership and excluding passive investments). Total managed customer figures include 100% of all operations where Celtel International has operational management.

	Six months to 30 June		Year to 31 Dec
	2004	2003	2003
Revenue ($ millions)	296.5	202.0	446.2
Proportionate Mobile Customers (millions)	2.7	1.3	1.7
Total Managed Customers (millions)	4.0	1.9	2.5
EBITDA ($ millions)	96.0	61.2	150.6
EBITDA Margin (%)	32.4	30.3	33.8
Net Profit ($ millions)	56.8	12.6	73.9
Monthly Average Revenue per User ($)	22.50	25.00	25.00
Capital Expenditure ($ millions)	117.5	32.3	105.1
Total Assets at year End ($ millions)	937.4	517.4	715.1
Period End Gross Debt ($ millions)	269.8	221.9	237.8

For more details, please contact Marten Pieters, Chief Executive Officer: + 31 (0) 23 554 2672