Monday 22nd May 2006
Celtel's Rhodes returns
Having graduated from London Business School with a MBA (Distinction), Terry Rhodes went on to co-found (and act as chief strategy officer for) Pan-African mobile telecoms network operator Celtel. The business was sold to Kuwaiti firm The Mobile Telecommunications Company for £3.4 billion in 2005, just a matter of days before it was due to float on the London stock market. Speaking at London Business School’s recent Entrepreneurship Conference, Rhodes urged budding businesspeople to ‘look for opportunities in the areas where others don’t.’ Celtel was established in 1998 and Rhodes recalls that ‘we decided early on that we wanted to manage networks in Africa, so we approached a US firm for support. The response we got was, “how can you hope to do well in places like Uganda when you have people like Idi Amin in power?” We pointed out that he’d actually left office around 20 years earlier, but the guy we were speaking to said: “I’m the most travelled person in this company and if I don’t know that how well do you think this idea will go down in Atlanta?” It’s that kind of corporate culture that offers opportunity.’ Today Celtel operates networks throughout Africa – with markets including Chad, The Democratic Republic of Congo, Kenya, Niger, Sudan, Tanzania and Uganda – and Rhodes reasons that the scale of the opportunity has never been in doubt. ‘When we started there were two million mobile phones in Africa, today there are around 135 million, which still equates to less than one in every ten people,’ he explains. ‘This continues to represent a tremendous opportunity too. Just think how many people in Africa have never made a phone call? If three people use each phone, that’s still 500 million who’ve never had the chance. Do you think they don’t want to?’ Although he notes that ‘this was always a business decision. It wasn’t a charity and it wasn’t a development project,’ Rhodes does admit that ‘we put the emphasis on social capitalism from the outset. We wanted everyone to benefit from what we were doing, not just a few venture capital investors. The plan was therefore to become both a sustainable business and an African business. Today 95 per cent of our workers are African. The sale last year made 50 new millionaires and we also provided a significant sale bonus to our African staff when the deal went through.’ As for his advice on building a business in a perceived difficult market, Rhodes counsels that ‘it’s important to institutionalise the business early. A lot of people pay lip service to having strong principles and values. But you’ll get found out very quickly if you fail to take things seriously. We also tried to appoint a strong board early on and to choose shareholders who’d afford a degree of political protection in addition to cash.
‘Governance is essential too,’ he concludes, ‘no matter how small the business is, things have to remain clear.’
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