Mobile Telecommunications: Two Entrepreneurs Enter Africa

Abstract

In the 1990s, two entrepreneurs made daring, early entries into mobile telecommunications in Sub-Saharan Africa, both seeing great market opportunities there. One firm, Adesemi, would ultimately go bankrupt. The other firm, Celtel, would ultimately succeed and make its founder, Mo Ibrahim, a star of the global business community. Why the difference in outcome? Emerging markets often present weak rule of law, bringing many challenges to business success—from the demand for bribes to regulatory obstacles, hold-up problems, and even civil war. This case explores strategies that can limit these critical non-market risks in foreign direct investment and entrepreneurship. Students will step into the shoes of both companies by exploring their entry strategies, wrestling with the challenges they faced, and diagnosing the reasons why a shared insight about a new business opportunity turned out to be prescient—and led to extremely different endpoints.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Exhibit 1: Telecom Market Information

MOBILE CELLULAR SUBSCRIPTIONS (PER 100 PEOPLE)

Figure
TELEPHONE LINES (PER 100 PEOPLE)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

0.1

0.1

0.0

0.0

0.1

Congo, Rep.

0.7

0.8

0.7

0.5

0.2

Guinea

0.2

0.1

0.3

0.3

0.2

Malawi

0.3

0.3

0.4

0.8

1.0

Sierra Leone

0.3

0.4

0.5

0.5

0.2

Tanzania

0.3

0.3

0.5

0.4

0.4

Zambia

0.8

0.9

0.8

0.8

0.9

Sub-Saharan Africa

1.0

1.1

1.4

1.5

1.4

China

0.6

3.4

11.4

26.8

21.9

India

0.6

1.2

3.1

4.4

2.9

United States

53.7

59.9

68.1

59.0

48.7

World

9.8

12.0

16.0

19.4

17.8

MOBILE CELLULAR SUBSCRIPTIONS (PER 100 PEOPLE)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

0.0

0.0

4.8

17.9

Congo, Rep.

2.2

15.8

98.9

Guinea

0.0

0.5

2.1

40.1

Malawi

0.0

0.4

3.3

20.9

Sierra Leone

0.3

34.1

Tanzania

0.0

0.3

7.6

46.8

Zambia

0.0

1.0

8.3

41.6

Sub-Saharan Africa

0.0

0.1

1.7

12.0

45.1

China

0.0

0.3

6.7

30.1

64.0

India

0.0

0.3

7.9

61.4

United States

2.1

12.7

38.8

68.6

89.9

World

0.2

1.6

12.1

34.0

77.1

Source: World Bank, http://databank.worldbank.org/data/home.aspx (accessed February 15, 2013).

Exhibit 2: Economic and Demographic Indicators

GDP PER CAPITA, PURCHASING POWER PARITY (CONSTANT 2005 INTERNATIONAL $)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

630.9

357.7

260.2

277.0

316.5

Congo, Rep.

3,557.3

3,179.5

3,121.9

3,381.2

3,812.0

Guinea

893.0

823.0

904.2

970.9

978.4

Malawi

571.6

628.3

669.8

644.8

780.4

Sierra Leone

704.3

545.3

424.3

647.0

741.7

Tanzania

858.6

798.8

868.1

1,070.1

1,293.1

Zambia

1,248.6

1,025.0

1,028.2

1,157.6

1,401.3

Sub-Saharan Africa

1,608.7

1,497.1

1,564.6

1,768.4

2,037.4

China

1,100.7

1,849.2

2,667.5

4,114.6

6,818.7

India

1,209.8

1,404.2

1,722.1

2,208.6

3,038.8

United States

31,898.5

33,874.0

39,545.0

42,516.4

42,078.6

World

6,791.9

7,027.8

7,857.9

8,800.1

9,814.7

Population, Total

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

36,406,226

44,067,369

49,626,200

57,420,522

65,965,795

Congo, Rep.

2,388,902

2,732,706

3,135,773

3,533,177

4,042,899

Guinea

5,759,374

7,565,235

8,344,486

9,041,448

9,981,590

Malawi

9,380,892

9,883,350

11,228,756

12,822,587

14,900,841

Sierra Leone

3,981,567

3,898,363

4,143,115

5,153,435

5,867,536

Tanzania

25,478,979

29,943,732

34,038,161

38,831,024

44,841,226

Zambia

7,860,053

8,919,456

10,201,562

11,462,365

12,926,409

Sub-Saharan Africa

512,725,058

585,951,221

666,677,969

755,035,063

853,931,672

China

1,135,185,000

1,204,855,000

1,262,645,000

1,303,720,000

1,337,825,000

India

873,785,449

964,486,155

1,053,898,107

1,140,042,863

1,224,614,327

United States

249,623,000

266,278,000

282,162,411

295,516,599

309,349,689

World

5,296,211,383

5,714,716,950

6,118,131,162

6,503,186,030

6,894,377,794

Electric Power Consumption (kWh Per Capita)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

124.4

102.7

91.7

85.4

95.2

Congo, Rep.

171.6

150.0

95.4

120.3

145.4

Guinea

Malawi

Sierra Leone

Tanzania

51.1

57.0

58.2

69.6

77.9

Zambia

779.0

724.6

610.1

716.6

623.1

Sub-Saharan Africa

530.7

507.5

520.7

544.1

552.5

China

510.6

770.2

993.3

1,783.9

2,943.5

India

268.1

352.3

386.6

455.9

616.2

United States

11,713.3

12,659.6

13,671.1

13,704.6

13,393.9

World

2,117.1

2,191.2

2,380.9

2,660.2

2,974.8

Life Expectancy at Birth, Total (Years)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

46.8

45.9

45.7

47.0

48.1

Congo, Rep.

56.2

54.6

54.1

55.1

57.0

Guinea

43.7

45.7

48.1

51.1

53.6

Malawi

47.1

46.6

46.0

48.9

53.5

Sierra Leone

38.7

37.2

39.7

44.3

47.4

Tanzania

50.6

49.6

50.4

53.3

57.4

Zambia

47.5

43.5

41.9

44.4

48.5

Sub-Saharan Africa

49.5

49.3

49.7

51.6

54.2

China

69.5

70.4

71.2

72.2

73.3

India

58.4

59.8

61.6

63.4

65.1

United States

75.2

75.6

76.6

77.3

78.2

World

65.4

66.2

67.2

68.3

69.6

LITERACY RATE, ADULT TOTAL (% OF PEOPLE AGES 15 AND OLDER)

Country

1990

1995

2000

2005

2010

Congo, Dem. Rep.

66.8

Congo, Rep.

Guinea

41.0

Malawi

74.8

Sierra Leone

42.1

Tanzania

73.2

Zambia

65.0

71.2

Sub-Saharan Africa

53.2

57.4

62.6

China

77.8

90.9

94.3

India

United States

World

75.6

81.8

84.1

Source: World Bank, http://databank.worldbank.org/data/home.aspx (accessed February 15, 2013).

Note: Dashes indicate no data available.

Exhibit 3: Celtel's Top Shareholders

Figure

Exhibit 4: Additional Celtel Managers

Sir Alan Rudge, Celtel CEO (2001–2002) and board member. In March 2001 Sir Alan moved from being a non-executive board member at Celtel to part-time interim CEO. Prior to this, Sir Alan was the chairman of the board at MSI and had recently retired as deputy CEO of British Telecom.

Kamiel Koot, Celtel CFO (1998–2001). Koot joined Celtel as CFO in March 1998. Prior to this he was working in corporate finance as a senior associate director at Deutsche Morgan Grenfell. He specialized in emerging market telecommunications financing, and it was in this role that he met Dr. Ibrahim. After his tenure as CFO, Koot would head Celtel's Celpay subsidiary.

Marten Pieters, Celtel CEO (2003–). Pieters was selected to become Celtel's first full-time CEO in August 2003. Prior to joining the company, he was on the board of the Netherlands' largest telecom company, KPN. Pieters had three main objectives: professionalize the company, increase Celtel's growth rate, and give the owners an exit.

David Wilson, Celtel CFO (2001–). One of Sir Alan's first acts was to appoint Wilson CFO. Before this, Wilson held senior-level finance titles at British Telecom, Hewlett-Packard, and other international firms.

Tomas Julin, Celtel COO (1998–2000). Prior to joining Celtel, Julin served as MSI's COO and held various senior-level positions at other mobile telecom firms. He would oversee Celtel's operations until the end of 2000.

Omari Issa, Celtel COO (2001–). Issa would succeed Julin in 2001. Issa had worked with the World Bank funding telecom projects in developing countries across the globe, including in Africa and Asia.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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