In mid June, two IPOs occurred on African stock exchanges for shares in major cellular/mobile network operators. Celtel Zambia offered 20% of its equity on the Lusaka Stock Exchange and Safaricom, partially owned by Vodafone Kenya, released 25% of its shares on the Nairobi Stock Exchange.
Zain Group, the prominent Middle Eastern operator's value stake in Celtel Zambia grew to 78.9% with Vodafone now owning 35% of Safaricom.
Both operators are major market leaders in their respective countries. In Q4 2007, Safaricom had 9.25 million subscribers, controlling 81% of the Kenyan market. Celtel Kenya had 2.1 million subscribers or 18% of market share in Kenya. Celtel that dominates Zambia with 1.97 million subscribers, commanding a 74% market share. Its nearest competitor is MTN Zambia with 262,000 subscribers for the same period, a weak 10% of the market.
Clearly, these market positions make both companies attractive propositions for IPO. With Kenya’s mobile penetration rate at just 30% of the population and Zambia’s at 22% there is still upside expansion opportunities. In Lusaka, Celtel is only the 19th company to be listed on its stock exchange, a further indication of the extent to which the wireless industry is a driving force in African economies.
Safaricom’s IPO over-subscription is a classical case of the pent-up desire of Africans to demonstrate their appreciation for worthy investment. Telco businesses are the most profitable in African continent, even with the huge CAPEX, the average margin per user is relatively high compared to the world’s average. Africans will like to put their money where their mouth or voice is because each call they make is a call of wealth
Posted by: Bayo Adekanmbi | August 19, 2008 at 02:18 PM