Johannesburg
– Cell C – SA’s third-largest network – has grown its network from 12.8 million
to 15.3 million customers.
The
company, which reportedly owes more than R8 billion in debt and is in the midst
of selling a 45 percent stake to Blue Label for R5.5 billion, says it
has posted its first profit.
The company on Tuesday says its financial results for the
year to December shows a profit
of R540 million. The profit follows strong operational and financial growth across
key financial indicators, it says.
“The
2016 financial year was exceptionally challenging, with South Africa’s economic
growth essentially flat. Despite this, the company delivered solid
results,” says CEO Jose Dos Santos.
Cell C
increased revenue by 11 percent to R14.6 billion and service revenue by 8
percent to R11.8 billion in 2016.
“The
strong revenue growth was the result of a focused strategy of innovation,
exceptional value in product offerings and a customer-centric approach to how
Cell C services its customers.” Says Dos Santos.
Cell C, founded in 2001 by Saudi Arabia's Oger Telecom,
has struggled to compete against established players Vodacom and MTN Group.
Service
revenue was driven largely by the growth in data volumes, which increased by 67
percent in the reporting year. Data revenue was up 35 percent year-on-year to
R4.4 billion.
“While
we did see a marginal decline in traditional voice traffic, in favour of other
voice technologies, this was offset by the massive data growth,” says Dos
Santos.
Read also: Telkom sets sights on Cell C's debt
Cell C
was recently the subject of an unsolicited bid from Telkom, which offered R13
billion for the company. Net1, embroiled in a welfare payment dispute, will also
acquire a 15 percent stake in Cell C for R2 billion.
Those deals will see its debt reduced substantially.
Cell C
says its earnings before interest, tax, depreciation and amortisation gained 59
percent to R3.1 billion, and that margin moved from 15 percent to 21 percent.
During
2016, Cell C invested about R3.4 billion in its network and other fixed and intangible
assets, rolling out
predominantly LTE and LTE-Advanced. Cell C’s total capital expenditure
over the last four years amounted to more than R11.6 billion.
“We’ve
delivered on our promise to provide real value to consumers and despite already
offering some of the lowest tariffs in the market, Cell C reduced the effective
data rate by more than 20 percent during the last financial year,” notes Dos
Santos.
BUSINESS REPORT ONLINE