A woman uses her mobile phone in front of a store with telecom company Cell C branding in Kwandengezi
JOHANNESBURG - Cell C, South Africa’s third-biggest cellular provider, had met its target to reduce debt to R6billion from R17bn in the year to December, following last year’s successful capital restructuring of the business led by Blue Label Telecoms, the company said yesterday.

Blue Label spent R5.5bn for a 45percent stake in Cell C, while Net 1 UEPS Technologies paid R2bn for a 15percent stake in Cell C last year.

Cell C chief executive José dos Santos said yesterday the company was “back in business” after cutting debt via the completion of the recapitalisation programme.

Total subscribers grew 6percent to 16.3million.

“It (subscriber growth) could have been better. You need to understand that, in the first seven months of the year, we were hampered in any expenditure.

“Our cash flows were not there - literally non-existent. Funding was difficult to come by.

“It was difficult to go out there and compete until the restructuring was complete. Now that it is complete, we are back in business,” said Dos Santos.

Cell C’s mobile virtual network operator (MVNO) strategy and the growth in the wholesale division had also been key contributors to revenue growth, with wholesale revenue increasing 79percent to R717million.

Do Santos said Cell C was reaping the rewards following a decision to get into the MVNO business four years ago.

“We supply services to Mr Price, FNB, Virgin Mobile. We are talking to other financial institutions. Four, five years ago, people said MVNO would never work in South Africa, and we proved them wrong,” he said.

Cell C is the biggest cellular provider in South Africa after Vodacom and MTN. However, Dos Santos said the company was punching above its weight in terms of voice, data and content services.

“If you said: ‘Where are we today in terms of content?’, we are number one in content; no one does what we can do.

“If we say: ‘Where are we in service?’, We provide a far better service than our competitors.

“We are a niche player and a disruptor. If we get 22percent revenue share, we are happy,” said Dos Santos.


Commenting on the results, Brian Neilson, a director at BMI-Techknowledge, said the reduction of the debt was a huge stand-out number and was one of the main goals of the company’s capital restructuring with Blue Label.

“As a result, Cell C is able to invest far more into its business, and we have seen the outflow of that in terms of network capex, as well as investment in new businesses, including Black,” Neilson said.

Cell C said service revenue strengthened 12percent to R13.22bn in the year to December last year on increased data volumes.

Neilson said the growth in data revenues was to be expected, as was the mitigation in this growth rate relative to that of capacity sold as a result of aggressive effective price reductions.

“Telkom and Cell C have been the most aggressive in driving customer churn through promotional offers in recent years, and this looks set to continue,” Neilson said.

Data revenue improved 29percent and data usage increased 90percent year-on-year.

Smartphones on the network increased 21percent year-on-year to 9.2million devices.

Cell C’s current active data customers increased to 12.6million.