Cell C reports R540 million profit, reveals customer numbers

Mobile operator, Cell C, on Tuesday (14 March) released its financial results for the year ending December 2016, posting its first profit of R540 million.

The profit follows strong operational and financial growth across key financial indicators, the group said.

Cell C said subscriber growth increased 20% to 15.3 million active customers over the reporting period.

Financial highlights:

  • Revenue: +11% to R14.6 billion
  • Service revenue: +8% to R11.8 billion
  • EBITDA: +59% to R3.1 billion
  • Net profit: R540 million
  • CAPEX: R3.4 billion
  • Total subscriber growth: +20% to 15.3 million active customers

“The 2016 financial year was exceptionally challenging, with South Africa’s economic growth essentially flat.  Despite this, the company delivered solid results,” said Cell C CEO, Jose Dos Santos.

“The strong revenue growth was the result of a focused strategy of innovation, exceptional value in product offerings and a customer-centric approach to how Cell C services its customers,” the chief executive said.

Service revenue was driven largely by the growth in data volumes, which increased by 67% in the reporting year. Data revenue was up 35% year-on-year to R4.4 billion, Cell C said.

“While we did see a marginal decline in traditional voice traffic, in favour of other voice technologies, this was offset by the massive data growth,” said Dos Santos.

Cell C also highlighed strong growth in its MVNO segment.  Wholesale revenue increased 147% year-on-year to R370 million in revenue.

EBITDA increased significantly by 59% to R3.1 billion during the year under review. EBITDA margin increased by 7% from 15% in 2015 to 21% in 2016 through a combination of increased revenue and cost management and savings initiatives.

During 2016, Cell C said it invested approximately R3.4 billion in its network and other fixed and intangible assets, rolling out predominantly LTE and LTE-Advanced.  Cell C’s total capital expenditure over the last four years amounted to more than R11.6 billion.

“We’ve delivered on our promise to provide real value to consumers and despite already offering some of the lowest tariffs in the market, Cell C reduced the effective data rate by more than 20% during the last financial year,” said Dos Santos.

Operational highlights

  • Cell C now has approximately 5,000 sites; of which 2500 are LTE and more than 2000 are LTE-Advanced.
  • In 2016, Cell C commenced the replacement of the Core Transmission legacy SDH technology with new IP-MPLS and DWDM Core.

Cell C’s deal with JSE-listed Blue Label Telecoms inches nearer completion after the latter company announced late last month that it has entered into a ‘binding umbrella restructure agreement’ with Cell C, debt providers of the mobile operator, a third party investor, and other relevant parties.

Bloomberg reported last week that Telkom was again considering a bid of $1 billion (around R13 billion) for Cell C. However, Cell C said it is committed to its deal with Blue Label, which was initially announced as far back as December 2015.

In October last year, Blue Label said it would up its stake in Cell C with a R5.5 billion payment for 45% of the company, up from R4 billion for a 35% stake it originally offered.

Read: Cell C reveals how much money former CEO earned

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Cell C reports R540 million profit, reveals customer numbers