Kenyan investors have an opportunity of buying into yet another mobile phone company, Celtel Zambia, barely two weeks after the close of the Safaricom IPO.

On offer are one billion shares, 20 per cent of Celtel Zambia, at a price of Zambian Kwacha (ZMK) 640 or Sh11 at current exchange rates.

It is open to employees of Celtel Zambia, Zambian nationals and corporates, foreign institutional investors.

That means individual investors in Kenya will have to go through pooled funds set up by investment banks and unit trusts. Applications for the ordinary shares will be in a minimum of 700 ordinary shares and thereafter in multiples of 100 ordinary shares.

Sterling Investment Bank and Afrika Investment Bank are among the members of the Nairobi Stock Exchange that are facilitating participation in the IPO.

Mr David Ithanya, a director at Sterling Investment Bank, described Celtel Zambia as a good short-term buy.

"If you are looking at it as a one year investment then it is a good investment as the sector seems to be growing at a fast rate," Mr Ithanya says.

Celtel Zambia has so far been the star performer of the 15 African subsidiaries in the Celtel International stable. In 2007, it reported revenues of US$250 million and net profits of US$ 53 million. Operating profit before factoring in Income Tax, depreciation and amortisation (EBITDA) have grown from US$38 million dollars in 2005 to US$122 million in 2007.

Celtel Kenya has been a laggard, reporting a net loss of US$ 22 million on revenues of US$209 million last year.

The Zambian subsidiary controls 78 per cent of that country's market with subscribers standing at 1.9 million at the end of last year out of a population of 12 million people. The mobile penetration rate in Zambia was estimated at 20 per cent by the world cellular information service.

Competition in the mobile market comes from two other mobile operators - Cell - Z and MTN Zambia. Plans are also underway to license a fourth mobile phone operator.

The mobile telephony market lacks innovative products offering like in Kenya where mobile phone subscribers have launched money transfer services. Competition is primarily on the basis of coverage, price, quality, brand, service offerings and customer service.

According to its prospectus, Celtel Zambia has segmented its market into corporate, small and medium enterprises and individual customers.

A large majority of its customers, 92 per cent, are on per second billing, a fact that has seen its monthly average revenue per user (ARPU) declining from US$16 IN 2005 to US$13 IN 2007 despite an increase in customers.

Unlike in the just concluded Safaricom IPO, one of the risks, which investors face is that there is no allocation criterion for each pool of targeted investors. "How does one plan if they have not disclosed the allocation criteria?" asks Mr Ithanya. Should an oversubscription occur, it will be left at the discretion of the vendor to allocate the shares.

"In the event of oversubscription the selling shareholder, Celtel Zambia, reserves the right to accept or refuse any application in whole or in part," says the prospectus.

Investors willing to buy into the IPO will also face a currency risk as happened to investors with Stanbic Uganda.

The Kwacha has made gains trading this week at 3,437 to the dollar and analysts expect it to strengthen as demand grows for Zambia's copper. The IPO opened on April 30 and runs until May 20.

with listing on the Lusaka Stock Exchange scheduled for June 11 2008. The Zambian all share index shows returns doubled last year, compounding a five times increase in the last three years.