Mergers, Acquisitions and Financial Results

Mobile phone operator, Celtel Kenya Limited's half-year after tax profits dropped to Sh64 million in the first six months to June from Sh626 million registered in the same period last year.

Chief Executive Officer Gerhard May attributed the drop to the depreciation of the Kenya shilling against major currencies. The firm made Sh64 million down from Sh626 million last year.

He said the company had invested heavily in upgrading its equipment and network in the period, which coincided with the depreciation of the local currency. "This affected our profits because most of the equipment used was imported." he said. There was a marginal decline in operating profits which stood at Sh822 million compared to Sh826 million registered in the same period last year.

The financial costs grew massively to Sh 900 million in the period under review compared to a low of Sh97 million registered in the same period last year. May said that the company's subscriber base had reached 2.1 million, adding that the company will spend Sh7 million on its network this year to cater for growth of customers to an estimated 3.2 million.

"The customer growth is expected to strengthen in the second half of the year, during which strategic initiatives like reduction in international calling rates, a new sim-based payphone and other services are expected to hit the market." he said.

Post-paid customers are growing more rapidly than the pre-paid subscribers, said the CEO, adding that the company will focus on growing its revenues and market share by rolling out more products. Celtel had already made it easier for users to communicate across the East African region, he noted.

"Our eyes are in the future and we plan to cover 76 per cent of the population by the end of this year, and 95 per cent by end of 200."

At the same time, Mr May opposed the Government's intention to introduce a Common Service Fund (CSF) to finance network coverage of rural areas, saying that Uganda, which has a similar fund, has a lower telephone penetration than Kenya.

The Nation