Prof. Ian Giddy, New York University
In March 2005 Celtel revealed that it had accepted Kuwait's Mobile Telecommunications Company $3.4bn all-cash offer. Under the terms of the deal, MTC would buy an 85 per cent stake in Celtel from its current shareholders, which include management. The remaining 15 per cent would be purchased within two years.
Celtel's chief strategy officer Terry Rhodes said the purchase price was generous as it reflected a number of
factors. Firstly, Celtel reported a profit of $147m in its last financial
year. With telephones reaching only 5% of the population in 10 of the
countries where it operates, the potential for growth was
enormous. Moreover, stock markets were rewarding telecommunications players
in emerging markets, so a listing would have placed a relatively high value
on its shares.
MTC said it would fund the acquisition through a combination of existing cash and new debt. Financing for the transaction was been arranged by a group of four major financial institutions
UBS Investment Bank acted as financial adviser to MTC.