Cell C ready to go after injection

• Group tells of new products and deal to underpin Capitec mobile network

With a more than threeyear recapitalisation now finalised, Cell C says it is ready to move forward with new telecom products and deals for the SA market and has signed a deal to underpin Capitec’s new mobile network as part of this mission. Last week, Cell C’s largest shareholder, Blue Label Telecoms, completed its long-awaited recapitalisation.

With a more than three-year recapitalisation now finalised, Cell C says it is ready to move forward with new telecom products and deals for the SA market and has signed a deal to underpin Capitec’s new mobile network as part of this mission.

Last week, Cell C’s largest shareholder, Blue Label Telecoms, completed the longawaited recapitalisation of the troubled mobile operator.

Cell C has struggled to make a profit since it opened for business in 2001. It has been laden with long-term debt of R8.7bn, prompting Blue Label and Lesaka Technology (formerly known as Net1), which owns 15%, to write down their combined R7.5bn investment to nil.

Having agreed on new terms with lenders, Cell C CEO Douglas Craigie Stevenson says the company is ready to expand its offering.

“In this next phase of growth, we have a number of new product offerings and partnerships in the pipeline, Capitec being the first one announced earlier this week,” he said.

Capitec has became the latest on Cell C’s roster of mobile virtual network operators (MVNOs). This means it leases network infrastructure from Cell C to sell data and voice services to its customers.

MVNOs — which include Virgin Mobile, Mr Price Mobile and Standard Bank Mobile — contribute about 2% of the total mobile subscribers in SA.

For Cell C, this piece of business accounts for about 10% of its customer base and 15% of revenue, Stevenson said during a presentation of the operator’s earnings on Thursday. Cell C has been the largest MVNO provider for a number of years but is now facing growing competition from larger mobile operators, mandated by the government to offer similar services in the market.

In 2020, Pick n Pay became MTN’s first MVNO customer as part of a push to attract people to its loyalty programme and boost sales through the provision of data and voice services.

Outside of MVNO services, Cell C hinted at the Digital Council Africa’s conference in Cape Town that it would soon be offering new fixed internet products, aiming to take advantage of growing demand for such services in the home and business market.

This comes as the mobile operator reported total revenue for the first six months of 2022 was stable at R6.51bn compared with R6.59bn in the prior comparable period.

The bulk of the revenue continues to come from the prepaid segment including prepaid data products, contributing about 45% to the total at R2.96bn.

For the 2021 financial year, revenue from its prepaid customer base contributed 47% to total revenue at R6.27bn, the company said. Cell C declared a loss before interest and tax for the period of R1.09bn, compared with a R667m profit previously. This is down to impairments made in the half, accounting adjustments and costs associated with finalising the recapitalisation.

A turnaround strategy is central to Cell C’s many years trying to fix its balance sheet. This will see Cell C shifting away from owning and operating its own network infrastructure in favour of roaming agreements with MTN and Vodacom.

The company uses its own spectrum through network towers operated by the larger players and participated in this year’s spectrum auction.

Stevenson says this reduction in capital expenditure is one of the main pillars that Cell C hopes will keep it from digging another financial hole in future.

IN THIS NEXT PHASE OF GROWTH, WE HAVE A NUMBER OF NEW PRODUCT OFFERINGS AND PARTNERSHIPS IN THE PIPELINE