Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

4G/5G

Cell C boosts subs & sales but not everyone's happy

Article Image
South African network operator Cell C has reported an increase in revenues and earnings for the first half of 2018, but that hasn't been enough to calm the nerves of investors in Blue Label Telecoms, Cell C's single largest shareholder.

Blue Label acquired a 45% stake in Cell C last year as part of a mini acquisition spree, but its investors appear concerned about Cell C's prospects and those jitters are hammering Blue Label's share price, which has dipped 11% today to R6.85 and lost more than half of its value this year. (See Blue Label to Buy 3G Mobile for 1.9B Rand.)

On the face of it, Cell C, South Africa's number three mobile operator behind Vodacom and MTN, does not appear to be struggling. Its revenues for the first half of 2018 increased year-on-year by 5% to R7.8 billion (US$546 million), while its EBITDA (earnings before interest, tax, depreciation and amortization) grew 16% to R2.4 billion ($168 million).

It is still running at a loss, but has cut its net loss for the first six months of 2018 by 33% year-on-year to R645 million ($45.2 million).

Its customer base grew by 600,000 to hit 16.3 million, though that still leaves it along way behind its bigger rivals: Cell C commands a mobile market share of around 16%, compared with Vodacom's 47% and MTN's 30%, according to research house Ovum. (Telkom SA has a market share of about 5%.)

The operator has been particularly focused on wholesale operations, making itself home to many MVNOs (virtual network operators) that use its network to provide their own branded services. Cell C noted in its earnings update press release: "Cell C's MVNO strategy delivered strong growth in the wholesale division, specifically driven by customer data usage which generated the bulk of the revenue growth. Wholesale revenue increased by 51%, to R486 million and MVNO subscribers increased by 31%, from 1.3 million to 1.7 million."

It has also been brokering deals to expand its mobile coverage, in particular a roaming agreement with MTN. (See Cell C Strikes Roaming Deal Across South Africa With MTN.)

"Earlier this year we concluded a far-reaching roaming agreement with MTN to complement our own high quality network," noted CEO Jose Dos Santos in the earnings announcement. "The agreement provides our customers with wider 3G and 4G coverage, as well as automatic and seamless roaming access. This means that where a customer is on a call that happens to switch from a Cell C tower to a MTN tower, the call will not be dropped. This agreement allows us to now increase our capital investment during H2 in areas where we've chosen to build coverage and capacity."

The implementation of this roaming agreement has begun and is set to conclude by November, at which point Cell C's 4G coverage will hit 80% population coverage, compared with 33% prior to the roaming deal. The operator says its 2G and 3G population coverage is at 99% and 96% respectively. Things to keep in mind are that Cell C will discontinue its historic roaming agreement with Vodacom at the end of next year and that 4G service quality may improve over time if the South African government can get its act together. (See Is South Africa Close to a 4G Spectrum Breakthrough?)

Despite all this, Blue Label investors are freaking out, mainly, it seems, because of Cell C's debt situation, which now includes more short-term debts that have been arranged to meet the operator's network expansion needs and the potential requirement for additional support from Blue Label shareholders to prop up Cell C. Blue Label is desperately trying to allay such fears: A very thorough account of the situation has been published by Tech Central's Duncan McLeod, which you can read right here.

In the meantime, there is also the suggestion that Cell C might aim to become a listed company within the next 18 months, according to this Business Day report.

Ray Le Maistre, Editor-in-Chief, Light Reading for Connecting Africa.

Innovation hub

Story

Africa can leverage GenAI for economic growth – Microsoft

A whitepaper on generative artificial intelligence (GenAI) and the future of work has found that the African continent, with its young population, can leverage AI to drive economic growth.

Registration opens for Africa Tech Festival 2024

Registration has opened for the 2024 edition of Africa Tech Festival, the continent's leading platform for technology innovators, specialists and thought leaders.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Follow us on X

Industry announcements

More Industry announcements

Upcoming events

Cyber Revolution Summit
August 9, 2024
Gaborone, Botswana
Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

How e-mobility could transform Africa's transport sector

By Francis Hook

ICT analyst Francis Hook delves into Africa's e-mobility sector and unpacks the challenges faced locally and the benefits the move to electric vehicles could bring to urban transport systems.

Story

Omdia View: April 2024

By Omdia Analysts

April 2024's telecoms highlights in the Middle East and Africa included a license for Starlink in Ghana, new mobile termination rates in Ethiopia, and 6G trials in Bahrain – that and more in the latest Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002