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					1
Increasing Capital Flows to Africa
         Equity Investments


         Dr Mo Ibrahim
      Executive Chairman
     Celtel International B.V.
 (formerly MSI Cellular Investments B.V.)

             February 2004

                                            2
   Introduction

 Following two of my biggest shareholders…

 Give industry perspective on equity investment in Africa
Introduce myself and Celtel International
Focus on our experience in African telecoms

 Case study of what equity investment in Africa wants
Show how we deliver those requirements in practice

Conclusions




                                                             3
  Dr Mo Ibrahim
 Born in Sudan
Telecoms engineer in Africa
UK academic
First Technical Director BT Cellnet, now O2

 Founded MSI plc 1989
      Sold to Marconi 2000

 Spun out Celtel International , then called MSI Cellular
   Africa focused telecoms operator
   Over $300 million equity raised 1998-2003.
   Over $500 million invested,
   Over $1 billion value


                                                             4
 Company History

 MSI Plc was a global leader in cellular network and software
  consultancy

 Participated in design of over 50% GSM networks worldwide

 Supported leading GSM operators in licence bids and
 operational activities

 Created over $900 million value for shareholders

 Founders re-invested in African telecoms




                                                                 5
   African Telecoms - Overview

 Africa is the world’s least developed telecoms market
 20m fixed lines for 800m people
 Now approaching 40m cellular phones
 2% cellular penetration against world average of 19%
 World’s Highest growth in cellular penetration last 5 years;
 76% Compound annual growth rate




                                                                 6
    Corporate Overview

   Largest contiguous mobile network in Africa
   14 operations in12 countries in Sub-Saharan Africa
   2.5 million managed customers (03)
   Annual revenues of US$446m (03)
   Annual EBITDA of US$151m (03)
   Net profit after tax US$74m
   Operationally self financing
   Low gearing - debt : equity ratio of 0.8




                                                         7
     Footprint


                                                                                 Intelsat
                                                           Chad

                 LinkAfrica
                 Belgium                                               Egypt

                     Niger                                               Sudan
              Burkina Faso


                                                                                 Uganda
                              Sierra Leone                                       Congo DRC
                                             Gabon                               Tanzania
                                                                                 Malawi
                                              Congo
                                             Brazzaville
                                                                       Zambia




Celtel’s licences currently cover 31% of African continent and 25% of the population (excluding Egypt)

                                                                                                    8
   What Does Equity Investment Want?

 Equity investors want Africa to have:

   –   Stable political environment
   –   Predictable economic performance
   –   Educated workforce
   –   Transparency and Rule of law
   –   Sensible tax and regulatory regimes
   –   Modern technology

        • i.e. same requirements worldwide



                                             9
    Sub-Sahara Africa : Image

 The image of Sub Sahara Africa portrayed in much of the media is
  just the opposite:

•   Unstable political environments
•   Unpredictable economic performance
•   HIV/Aids
•   Corruption
•   Penal taxation and regulation
•   Outdated technology




                                                                10
  Sub-Sahara Africa : Reality

Reality is better than the image:
Improved political scene:
      Peace in DRC, safe elections in Senegal, Zambia Kenya,
   Nigeria,

Fast economic growth
      Diversifying away from commodities

Awareness and treatment of HIV/AIDS
     S Africa, education, generic drugs

NEPAD addressing corruption
     Improved regulation e.g. Nigerian telecoms licensing
     Improving technology (40 m GSM phones)
                                                               11
  Manage The Risks

Negative image is still there; especially on TV
     - Business beginning to see Africa’s fast growth potential
     (positive articles in Wall Street Journal, Businessweek
     and even The Economist)
     - But still worried about the risk…

So Celtel focuses on managing the risks
     Ethics and values
     Portfolio
     Governance and transparency
     Understand capital markets
     Develop local people, build local businesses
     Corporate social responsibility


                                                                  12
   Company Values

 Operate with highest standards of ethics
 Create pride of association with all our stakeholders
    Improve our customers’ lives by providing accessible and
     high quality communication services
    Deliver sustainable high returns on capital
    Provide opportunities for development and wealth creation
     to a talented workforce
    Work in partnership with our suppliers
 Be contributing members of the communities in which we
 operate
                                                            13
   Dealing With Corruption

 Start with shareholders’ values:


 IFC, EMP


 CDC, FMO, DEG


 Citigroup, Capital, Bessemer, Zephyr


 Personal integrity of founders

                                         14
    Shareholders (as of 31/12/03 on fully diluted basis)
•   Ibrahim Family Trusts        23.3%   •Alba Grupo March            1.9%
                                         •DEG                         1.8%
•   Celtel staff                 11.7%
                                         •FMO                         1.2%
•   CDC Capital Partners         9.8%
                                         •Old Mutual Asset Managers   1.2%
•   IFC                          6.9%
                                         •Palio Portfolio Managers    1.2%
•   WorldTel Africa              6.2%
                                         •General Atlantic Partners   0.8%
•   Africa Infrastructure Fund   5.8%
                                         •Comafin                     0.8%
•   Metapath staff & alumni      5.0%
                                         •Fonditel                    0.6%
•   Citigroup                    4.9%
                                         •Blakeney                    0.6%
•   Capital Group                3.9%
                                         •Standard Bank London        0.6%
•   Zephyr Management Africa     4.2%    •Legist Trust                0.5%
    Investment Fund
                                         •ING Group                   0.5%
•   Bessemer Venture Partners 3.5%
                                         •Others                      3.1%

                                                                             15
   Dealing With Corruption

 Instil shareholders’ values
 Zero tolerance
 Takes two to corrupt
 Refuse opportunities with doubtful partners
 Long-term approach for infrastructure
 Build local companies
 Re-investment
 Build and manage your reputation


                                                16
   Dealing With Political Risk

 Portfolio of operations
 No one minister or regulator has excessive influence
 Strong shareholders and Non political stance
 Refuse opportunities with unreliable governments
 Win hearts and minds of the people
    Cellular networks rarely damaged, even in wars



We have 2 ½ million influential customers



                                                         17
   Rule of Law

 Legitimate entry
    All our operations are properly licensed by Governments


 Use the Courts and establish your reputation


 Pay your taxes
    Legitimate transfer prices
    Cost based management fees




                                                               18
  Portfolio of Operations
Country                                Launch   Celtel      Local                   Market
(all GSM except TTCL)                           Ownership   Partner                 Position
Burkina Faso                           Jan 01   96%         Cauris PE                  1
Chad                                   Oct 00   100%        --                         1
Congo (B)                              Dec 99   100%        --                         1
DRC                                    Dec 00   100%        --                         1
Gabon                                  Jul 00   84%         General Bus. Machines      1
Malawi                                 Oct 99   83%         MDC; IDBM                  1
Niger                                  Nov 01   70%         SONI                       1
Sierra Leone                           Sep 00   100%        --                         1
Sudan                    acquisition   Mar 01   39%         Sudatel (Local PTT)        1
Tanzania (Fixed -TTCL)   privatization Feb 01   35%         Tanzanian Government       -
Tanzania (GSM)                         Nov 01   35%         TTCL                       2
Uganda                                 Jul 95   100%        --                         3
Zambia                                 Dec 98   80%         Mitsui; IFC                1

 Strong local partners for understanding of in-country regulatory and business
  environment
 Market leader in the vast majority of the markets in which we operate

                                                                                               19
   Corporate Governance

We regarded this as essential for establishing “first world
business practices” to offset emerging market risks


Institutionalise from the start


Best practice on Board and corporate structure
  - Independent directors and advisors
  - Top international accountants : Ernst & Young
  - Best practice on tax and transfer pricing


We believe there is a premium return for good governance
                                                               20
    Board Members

Dr. M. Ibrahim   - Executive Chairman and Founder of Celtel and MSI Plc

Lord Prior       - Chairman of GEC until 1996; UK Cabinet Minister during Thatcher years

Salim Salim      - Secretary General of the OAU until 2001; former Prime Minister of Tanzania

Sir Alan Rudge   - President of Celtel and former Deputy Chief Executive BT

Jay Metcalfe     - Former Chief Executive of Millicom until 1997; Founder of Fortune City

Joseph Solan     - Represents IFC

Felda Hardymon   - Represents BVP and Professor Venture Capital at Harvard Business School

Hurley Doddy     - Represents Emerging Markets Partnership

Jonathon Bond    - Represents CDC Capital Partners

Tom Barry        - Represents Zephyr Asset Management

Ashley Dunster   - Represents Capital Group

                                                                                            21
   Understand The Capital Markets

Celtel HQ in Europe to access Western capital markets

Run private business as if it were public

Continuous due diligence
  - Hard currency revenue (over 80%)

Markets want:
  - focus and growth
  - track record and top professional management
  - delivery on promises
  - profits and cashflows



                                                         22
Growth
                            Total managed GSM customers


         3,000,000



         2,500,000



         2,000,000



         1,500,000



         1,000,000



          500,000



              -
                     1998     1999        2000      2001      2002   2003

                                     Total managed GSM customers




                                                                            23
    Experienced Professional Management

Marten Pieters   Chief Executive Officer; ex-KPN

David Wilson     Finance Officer, ex-BT

Omari Issa       Operations Officer; ex-IFC

Moez Daya        Technology Officer; ex-BT Cellnet

Terry Rhodes     Strategy Officer; ex-BT Cellnet, Cable & Wireless

Tsega Gebreyes   M&A/Business Development Officer; Ex-CitiGroup & McKinsey

Tito Alai        Marketing Officer; ex-Kodak and Unilever

Jac Bouwman      Chief Human Resource Officer; ex-Shell


                                                                             24
               Deliver On Your Promises

                               Proportional revenue                                                   Proportional EBITDA

                                                                                    160




                                                                     USD Millions
               500
USD Millions




                                                                                    140
               450
                                                                                    120
               400
                                                                                    100
               350
                                                                                        80
               300
               250                                                                      60


               200                                                                      40

               150                                                                      20

               100
                                                                                    -
                                                                                             1998   1999    2000     2001   2002   2003
               50
                                                                                    (20)
                0
                                                                                    (40)
                     1998   1999      2000      2001   2002   2003




                                                                                                                                     25
    Corporate Social Responsibility

    CSR essential – not an option

    Balance commercial and social aspects

    First priority is business

    But it must be sustainable
     - environmentally non-destructive
     - socially aware :help fight against HIV/AIDS
     - developmental : communication assisting education and
     freedom of speech

                                                               26
    Invest In Your People
    African companies often over-dependent on expatriates

 Short term and start up : essential for relevant skills
Medium term : expensive cost base
Long term : alienates local staff

    99 % of Celtel 5,000 staff are local Africans

    Formal knowledge transfer and development programme

    High potential staff identified and used in teams alongside
     experienced expats


                                                                   27
    Conclusion - Celtel
    Demand is much higher than forecast
    Huge growth opportunity from 2% penetration
    Business model matched to African markets and needs
       - Proven global technology
       - Pre-pay for the cash market
    Professional, focused, long term approach
       - Africa is 100% of our business
    Understand the financial markets
    Manage the risks
    You can make profits (over $70m in 03)
       - and upstream cash (over $100m in 02-03)



                                                           28
  Conclusion- Equity Flows to Africa
 Education and awareness is needed
      - Idi Amin does not run Uganda
 Africa is not just about oil…
      - Or just about South Africa
 American equity investment will miss a major
  growth opportunity if it misses out on Africa
      - Chinese and Gulf money is coming (eg Niger, Algeria,
      Tunisia)
 Back the winners
      - Funds’ diversification rules often limit investment in
      winners
      - You invented the rules of capitalism. Seek the highest
      returns. They are to be found in Africa.

                                                             29
Celtel Share Price Performance
Indexed Price

  500

  450

  400

  350


  300

  250

  200

  150

  100

   50

    0
    Jan 99         Jul 99       Jan 00       Jul 00   Jan 01    Jul 01     Jan 02   Jul 02       Jan 03   Jul 03       Jan 04

             MSCI Emerging Markets Telecom Services            NASDAQ Telecom                FTSE 100              Celtel



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