South Africa: In debt, Cell-C operator plans drastic measures to cut spending
March 27th 2019
The mobile operator Cell-C is currently experiencing financial difficulties that require him to consider drastic measures to reduce his expenses. The company posted a net loss of R1.273 billion (US $ 92,534,043) as of December 31, 2018, plus a debt of R8.9 billion (US $ 646,938,720).
In short the opposite of the growth forecasts expected by its majority shareholder, Blue Label Telecoms, which, when the recapitalization of the telecom company was finalized in August 2017, aimed at reducing its debt by 20 billion rand. (US $ 1,453,794,877) to R6 billion (US $ 436,138,463).
The first steps taken by Cell-C to curtail its spending have already resulted in a number of changes, including the departure of Chief Executive Officer Jose Dos Santos on March 1, 2019. The company also terminated its sponsorship of Miss South Africa, after five years as the main sponsor of the contest. The telecom company even considered a moment to outsource its network operations by entrusting them to the MTN competitor with whom it already has a national roaming agreement. Cell-C can indeed, thanks to this partnership, avoid incurring expenses to extend its network simply by relying on the network of its partner to route its calls in the zones where it is not present.
On this potential outsourcing contract, Jacqui O’Sullivan, head of business affairs at MTN South Africa, said the telecom company’s customers ” have several options, but it would not be appropriate to comment on customer operations.” , whatever their context “.
The troubles of Cell-C do not only have an impact on the telecom operator. They also undermined the credibility of the market towards its majority shareholder, Blue Label Telecoms, which saw its share price drop in less than two years by 17.04 rand (US $ 1.2357) when it entered the company. C at 3.88 rand (US $ 0.2181) on March 20, 2019. That’s a 78% tumble.
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