21 August 2018

South Africa: Cell C Tops 16m Subscribers, Turnaround On Track

Cell C's turnaround strategy is bearing fruit despite a challenging environment, the mobile operator said on Tuesday.

In a statement, the company said it had increased its subscriber base by 600 000 to 16.3 million and was on track to continue growing.

The first half of the year saw a revenue increase of 5% to R7.8bn and a service revenue increase of 11% to R6.9bn.

Growth was driven in part by Blue Label Telecoms, which took a 45% stake in the operator in order to provide debt relief and build economies of scale.

"Following the measures put in place as part of our turnaround strategy, we are seeing both a satisfactory financial performance to date and increased value offering for our customers.

"We have focused our efforts on innovation and improving our network coverage and quality as well as customer experience, and will continue to build on our strong foundation with revenue projected to perform promisingly," said Cell C chief executive Jose Dos Santos.

Challenges

Cell C also announced that data revenue was up by 20% to 52% of all mobile revenue, compared to 42% in 2017.

In the wholesale business, where Cell C facilitates a number of mobile virtual network operators (MVNOs), the operator saw a healthy jump in revenue.

MVNO revenue increased by 51% to R486m on the back of an increase in customer growth of 400 000 to 1.7 million.

This offset a decline in voice traffic revenue, the company said.

"Our strong performance in service revenue has offset the voice traffic revenue, which declined by 6% for the period.

"This was expected as consumers continue to switch to alternative voice services, resulting in a 10% decline in voice traffic," said Dos Santos.

The operator also faces further challenges after Standard & Poor's downgraded Cell C to junk status in 2018. Of particular concern was the ability of Cell C to make debt payments and the availability of spectrum in SA.

The company's debt declined from R968m to R645m.

The results entrench Cell C's position as the third operator in SA, though significantly behind Vodacom and MTN with 43.1 million and 29.8 million subscribers respectively.

The industry remains concerned about plans for broadband spectrum and both Vodacom and MTN have petitioned the government to speedily address the issue.

Source: Fin24

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