World Bank Pledges $320 Million for Cell Phone Networks in Africa
Prepared by: Luisa Dos Santos, August 2007
Mobile telephone services offer a solution to one of Africa’s greatest challenges, overcoming the lack of information and communication infrastructure that greatly increases the cost of doing business throughout the continent but particularly in underdeveloped sub-Saharan Africa. In developing countries, mobile technologies have the capacity to deliver economic prosperity in ways that are completely different from countries where electricity, computer hardware and Internet connectivity are cheap and abundant. As stated by one industry executive, “The expansion of mobile telephone services to underserved areas will help create a more favorable environment for businesses to operate, creating jobs and contributing to poverty reduction.”
Establishing worldwide communication without having to install millions of miles of telephone lines is very advantageous for emerging markets. In the past, modernizing an economy would involve first establishing a foundation of costly infrastructure. Now, a wireless network can provide a full range of high-technology features including text messages and voice calls, Internet browsing, music (MP3) playback, memo recording, personal organizers, e-mail, instant messaging, built-in cameras and camcorders, ringtones, games, radio, Push-to-Talk (PTT), infrared and Bluetooth connectivity, call registers, ability to watch streaming video or download video for later viewing, video call and service as a wireless modem for a PC. The sophistication and agility of the mobile phone networks, completely bypassing expensive wired infrastructure, has considerable benefits; suggesting the question; can mobile and handheld technologies offer an alternative to the centralized, massive, static and expensive technologies and infrastructures of ICT in the developed world?
Mobile phone penetration and usage in Africa reflects this potential and is fueled by the availability of prepaid or 'pay as you go' services, where the subscriber is not committed to a long term contract. According to industry sources, the cell phone market in Africa is expanding nearly twice as fast as Asian markets and “is now the fastest-growing cellular market, leading the world with innovative service offerings….” The World Bank Group’s International Finance Corporation (IFC) has agreed to support this trend by investing $320 million to support the expansion of cellular telephony. This financing is its largest to date in Sub-Saharan Africa. Investments such as this have contributed to the region’s dramatic growth in mobile phone penetration levels, increased competition, and reduced tariffs.
The IFC loan will provide a $160 million package (to be matched by eight other bilateral financiers and commercial banks) to regional mobile network provider Celtel. Celtel, owned by Mobile Telecommunications Company (MTC), is a pan-continental mobile network, offering telecommunications services to more people in Africa than any other network. MTC group is a leading provider of mobile telecommunications in the Middle East and Africa with 21 operations, 13,000 employees and 29.7 million customers of its comprehensive range of mobile voice and data services. Celtel itself has mobile licenses covering more than 400 million people, and more than 20 million customers in 14 countries.
The loan will be to five subsidiaries of Celtel, which are to invest the funds in expanding and upgrading mobile phone networks in the Democratic Republic of Congo, Sierra Leone, Uganda, Madagascar and Malawi. The transaction marks the first ever mobilization of IFC-syndicated loans in Madagascar, Malawi and Sierra Leone, helping to bring long-term (seven year) commercial financing to markets at the frontier of private-sector development. The syndication includes three South African banks participating in the firm's B-loan program for the first time. The loans will be packaged as follows: Celtel DRC will get $150 million; Celtel Madagascar will get $50 million; Celtel Malawi will get $30 million; Celtel Sierra Leone will get $50 million, and Celtel Uganda will get $40 million.
This loan and the mushrooming growth in the mobile phone networks throughout Africa mean that opportunities abound for contractors and subcontractors interested in entering the African private sector telecommunication market.
MTC-Celtel Contacts:
Mr Ibrahim Adel
Investor Relations Director, MTC Group
Mr Mohammad Abdal Abdal
Investor Relations Team Leader, MTC Group
Mwambu Wanendeya, Amsterdam
Antoine Aboukhalil, Kuwait
IFC Contacts:
Mr. Neil Roger
Foreign Investment Advisory Service, General Manager
Mr. Nigel Twose
Foreign Investment Advisory Service, Manager
Mr. Tom Davenport
Foreign Investment Advisory Service, Manager
Tdavenport@ifc.org
Mohsen A. Khalil
Director, Global Information &
Communication Technologies
Kent E. Lupberger
Senior Manager, ICT Portfolio &
Technology Division
Valerie D'Costa
Manager, Information for
Development Program (infoDev)
Philippe Dongier
Manager, ICT Policy Division
Stephanie von Friedeburg
Manager, ICT Telecom & Media Division
Houtan Bassiri, Johannesburg
hbassiri@ifc.org
Desmond Dodd, Cape Town
Henny Rahardja, Washington DC
hrahardja@worldbank.org
For More Information
The U.S. Commercial Service in South Africa can be contacted via e-mail at: Heather.Byrnes@mail.doc.gov or Luisa.D.Santos@mail.doc.gov. Phone: +27-11-778-4800; Fax:+27-11-268-6102 or visit our website.
The U.S. Commercial Service — Your Global Business Partner With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www.export.gov/.
Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice. International copyright, U.S. Department of Commerce, 2007. All rights reserved outside of the United States.
