Another Level

Investcom has built a reputation for seeking opportunities in niche geographic markets characterised by strong growth potential. The strategy has resulted in the company developing a footprint spanning Africa, the Middle East and Europe, and CEO Azmi Mikati is now relishing the prospect of entering more mainstream markets.

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By  Alex Ritman Published  April 30, 2006

|~|investcom200.jpg|~|Azmi Mikati, Investcom CEO says his priority is to seek out non-organic growth opportunities to create further shareholder wealth. |~|Dubai-listed mobile telecoms operator Investcom reported net profit for 2005 to end-December was up 31% year on year to US$207.8 million. Gross operating revenues during the period amounted to US$903 million, representing a 43% growth rate, while EBITDA reached US$396 million, up 42% year on year. “Well, I am very satisfied with the full year results for 2005, and they were excellent results. We are looking forward to achieving better results hopefully in 2006,” Investcom CEO Azmi Mikati tells CommsMEA. “I think we're operating in markets that are growing very rapidly. Therefore a lot of growth will come from our operations in the new countries.” Investcom owns and operates GSM networks, ostensibly under the Areeba brand, in Syria, Ghana, Yemen, Benin, Liberia, Cyprus, Guinea-Bissau and Sudan, and was also recently awarded GSM licences to build and operate mobile networks in Afghanistan and Guinea. The operator counted 4.9 million subscribers at the end of 2005, up 91% from a year earlier. Last month the operator announced launching services in its latest market — Guinea — under the brand name Areeba. Services will initially be concentrated in the capital city, Conakry, with national coverage following soon after. Areeba's offering will include national and international mobile servicesincluding SMS, multiple and conference calls, and voice mail services, which are currently only being offered by Areeba. Guinea's population stands at approximately 9.4 million, with mobile penetration levels estimated at just 1.88% at the end of December 2005. Areeba is the fourth mobile operator in Guinea. Areeba was awarded a build, operate and manage licence and the company selected Ericsson in order to roll out the network in Guinea. Having established a presence in many smaller markets, Investcom appears ready to step up to the next level and start competing for opportunities in higher profile, larger markets, in which it is no doubt set to face some of the most acquisitive regional operators around. Mikati has already identified licensing opportunities set to occur later this year in Saudi Arabia and in Iraq as holding potential for Investcom's participation. “The Saudi Arabian third licence is something that we would seriously consider,” Mikati states. “(And) if you look at Iraq, this is a market that is now going through the process of licensing GSM concessions. We're very keen to pursue these aggressively,” he adds. While Mikati is looking forward to seeking further opportunities in higher profile markets, he remains generally satisfied with Investcom's footprint to date. “I think if you look at our markets, a lot of them are quite sizeable. ||**|||~|Niam-Kawas200.jpg|~|Investcom is a committed, long-term mobile communications operator, not a financial investor, says Niam Kawas, executive director for corporate affairs.|~|Afghanistan has 30 million people, Sudan 40 million, Ghana 20 million, Yemen 20 million, Syria 20 million. So you have some of those sizeable markets, and then you have smaller ones with Guinea that has 10 million people, and Liberia with a couple of million,” Mikati explains. “What we try to do is not look purely at the size of the market when we look at an opportunity, we really try to look at what that market can give us, and what is the profile of that market — is it a market that has potential?” Investcom's focus on the investment case for any given opportunity has given rise to suggestion that the company is essentially a financial investor in telecoms rather than an actual mobile operator, or strategic investor. Celtel International CEO, Martin Pieters, for example, is of the opinion that the wave of consolidation across the African mobile telecoms landscape omits some pan-continental operators such as Investcom. “In my view, Investcom could be more subject to acquisition than establishing its own position,” says Pieters. “It's a typical example of a group that could be taken over or merged with another to form a bigger entity.” Indeed, rumours circulated in the African press last October that South African operator MTN was looking to Investcom with an eye to broadening its African presence significantly in one fell swoop. However, the suggestion that Investcom is primarily a financial investor in its outlook with a strong emphasis on an exit strategy is a notion that is rejected by the company. “We are a telecoms operator and are committed to the investments we have made. In the future we will be looking to make more as the opportunities arise,” Niam Kawas, Investcom's executive director for corporate affairs says. Last October Investcom completed the successful listing of its global depositary shares on the London and Dubai stock exchanges, raising a total of US$741 million, which was at the top end of expectations. The company sold 60 million global depositary shares, or 22.6% of the company, at US$12.35 a share, valuing the whole entity at about US$3.3 billion. In October, Investcom's shares were listed on the Dubai International Financial Exchange, making it the first company to quote its stocks on the region's new stock market. Against this financial backdrop, it appears Investcom is very much in the position where it could play the role of acquirer quite successfully, rather than fearing being acquired by any one of the top regional players. “Our strength I think is the ability to go into markets and turn them profitable very, very quickly,” suggests Mikati. “If you look at most of the markets we are in, we operate them in such an efficient manner that by probably the first year or the first 18 months, we're EBITDA positive, and before the second year, we're net income positive, so I think that's an important thing,” he adds. Looking ahead, Mikati says his priorities for this year and beyond are to try to look for non-organic growth opportunities that can grow the value of the company and fit within its asset portfolio. “I'll be spending a lot of time making sure we continue as we have done in the past to create shareholder value.” ||**||

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