Cell C returns to profitability as new business model pays off

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CELL C, South Africa’s fourth-largest telecommunications company, said yesterday it had increased subscriber numbers and returned to profitability in the six-month period ended June 2021 with pre-tax profit of 148 million rand marking a turnaround from the 7.6 billion rand loss reported year-over-year.

Managing Director Douglas Craigie Stevenson said the group’s financial performance has improved and is making good progress in the three-year transition to a virtual RAN (Radio Access Network), the implementation of its new business model and the introduction of new products to the market.

He said Cell C had successfully migrated 40% of the network, with access to 7,500 towers of which 95% were 4G / LTE compatible.

He said Eastern Cape, Free State, Northern Cape and Limpopo had been fully migrated.

“We will continue to add new sites that will reduce our network deficit. In two years, we will have access to over 12,500 sites across the country, improving the quality and coverage of our network, ”he said.

Stevenson said this allowed the group to re-enter the broadband market, reconsider the product line it offers and keep its average revenue per user (ARPU) at R66 year-on-year, while increasing the 15% prepaid customer base to 9.6 million from 8.4 million in the first half of last year.

Cell C said ARPU was supported due to the operator’s strategy of focusing on the most profitable customers.

The group said the total number of subscribers increased by nearly 13 million from 11.7 million during the same period last year. Total revenue for the six-month period fell 5% to R6.6 billion, with most of Cell C’s prepaid base revenue contribution to R3 billion and a reduction from its 25% postpaid base to Rand 563 million.

Profit before interest and taxes increased to Rand 736 million, from a loss of Rand 5.3 billion, mainly due to the significant depreciation of network assets in the previous year and savings in operating expenses in the past year. during this reference period.

Cell C suffered a R5 billion depreciation last year as the company evolves to become a buyer of infrastructure services and decommission its own physical infrastructure by 2023.

The group also unveiled plans to invest R 1 billion annually as part of its transition to a tech company.

Zaf Mohamed, chief financial officer of Cell C, said that Cell C would need more than R5 billion of investment per year to build a comparable network, it would also take several years to implement, and instead, the The group was deploying a lightweight infrastructure model and planned to invest capital expenditure of R 1 billion per year.

“Our three most valuable assets that are not on our balance sheet and that underpin our transformation journey are spectrum, a loyal and profitable customer base, and a resilient brand. With our network strategy, consumer-centric digital products and solutions, and our focus on a high performance culture, we have a strong platform from which to compete and help us achieve our intention. strategic, ”added Mahomed.

Mohamed said the investments included technologies to support the platform model he was implementing.

As part of the transition, Cell C notably closed the radio networks and moved all prepaid customers to the MTN network and in terms of postpaid subscribers, the company also entered into a new agreement with Vodacom to extend its roaming agreement. national for 2G, 3G and 4G connectivity.

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