Celtel Zambia says to spend $70 mln on expansions, upgrades

By Shapi Shacinda

LUSAKA, July 25 (Reuters) - Celtel Zambia Plc (CELZ.LZ) said on Friday it was on course to raise its subscriber base to 2.7 million by December from 2.3 million in June through a $70 million expansions programme after increasing its half-year profits.

The firm's net profit for the six months to June rose to 118.3 billion Zambian kwacha ($34.79 million) compared with 102.9 billion kwacha in the same period last year, the company's head said.

Celtel Zambia Managing Director David Venn said the southern African country's largest mobile operator planned upgrades and expansions as its seeks to raise its subscriber base.

"Customer numbers exceeded 2.3 million in June (from) 1.6 million in June 2007 (and) 1.9 million in December 2007. We are optimistic we will reach our target of 2.7 million in December," Venn said.

"Our capital expenditure this year is $70 million," Venn told journalists in a conference call from the United States, arranged to announce the company's results.

Celtel Zambia listed 20 percent of its shares on the Lusaka Stock Exchange (LuSE) in June, in Zambia's largest ever initial public offering. Venn said nearly 50 percent of the floated shares were bought by Zambia's institutional and ordinary investors.

He said the mobile operator had installed 30 towers this year compared with over 100 towers in 2007, adding the expansion programme was being hampered by customs duty of 25 percent on imported equipment and other installation charges.

Venn said Celtel had since spoken to the authorities in a bid to have the customs duty reduced and other installation taxes cut or waived.

Celtel is also in talks with the government on its plans to launch 3G (third generation network) which will allow it to provide high-speed data communication services, including mobile internet services, Venn said.

"Our efforts to cut the cost of telecommunications are strained by high taxes. About 50 percent of the cost of communications goes to government taxes," he said.

Venn said Celtel was still negotiating for its own international gateway licence with the Communications Authority in a bid to improve international calls, currently routed through the state Zamtel telecoms company.

Celtel International BV, which is part of Kuwait's Zain Group, holds 78.9 percent in Celtel Zambia, while the World Bank's finance arm -- the International Finance Corporation (IFC) -- has a 1.1 percent stake.

Other mobile operators in Zambia are Cell-Z, which is a Zamtel subsidiary and MTN Zambia, a unit of Africa's biggest listed telecom firm MTN (MTNJ.J) of South Africa. (Reporting By Shapi Shacinda; editing by Sue Thomas)