Cell C is rapidly bleeding subscribers - but it’s still alive, and it has a plan
Cell C is struggling, but it’s changing its business model so it can keep on going.
The ailing mobile operator lost more than a third of its prepaid customers in the past year.
It recorded a R7.5 billion net loss in the halfyear to 30 June 2020 (from a net loss of R875 million in the corresponding period last year).
The Money Show’s Bruce Whitfield pointedly asked Cell C CEO Douglas Craigie Stevenson, “Are these the worst results that we’ll see from Cell C? We’ve heard so many turnaround promises – is it different this time?”
“I certainly believe it is,” answered Stevenson.
He argues the losses were mostly due to once-off costs and that normalised earnings grew by 64% (to R1.8 billion).
“These are the last of the major changes. These were not cash losses. If it was, we would not be around for longer than a week.”
Cell C is facing a lot of competition, especially from Telkom, so it’s moving away from a business model that requires a lot of capital.
“We’ve become an aggregator of wholesale capacity, which we on-sell. We become the biggest consumer or buyer of capacity from existing networks,” explained Stevenson. “We got rid of a ‘build it and they will come” mentality."
Stevenson resisted talk of a merger with Telkom.
“A merger with Telkom won’t fix our debt issue,” he said. “You can’t put two inefficient businesses together and expect something super-efficient out of that. The latest recapitalisation is adequate to carry our debt."
Listen to the interview in the audio below.
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