Cell C says that it does not owe MTN almost R400 million.
On Thursday (8 August), MTN reported its financial results for the six months ended June 2019, in which it identified a gap in its revenue to the tune of almost R400 million, which had not been recognised as part of the roaming agreement it had with Cell C.
“As a result of the reassessment and in compliance with IFRS 15 Revenue from Contracts with Customers, we have not recognised revenue amounting to R393 million for network roaming services provided to Cell C during the period,” the company said.
“MTN did not recognise all revenue accrued on satisfied performance obligations. Revenue was only recognised on completed services based on the non-refundable consideration received and the group impaired the receivable balance recognised by R211 million,” MTN said.
“We are evaluating a sustainable solution to the agreement with Cell C.”
Up to date with payments
However, according to Cell C chief financial officer, Zaf Mahomed, Cell C is up to date with all payments to MTN.
“Aspects of the current roaming agreement were recently renegotiated and this has led to a reduction in roaming obligations,” he said. “Cell C is not able to comment on the financial accounting of these obligations by MTN.”
MTN and Cell C entered into a network roaming agreement in October 2018, although delayed payments have forced MTN to evaluate the roaming agreement to find a sustainable resolution.
Earlier this week, Cell C announced that it had finalised a term sheet which details a further national roaming agreement with MTN.
“This agreement lays the groundwork for a broader national roaming agreement, supporting the policy goals of avoiding network duplication and the burden on the environment, where shared infrastructure drives efficiencies in the delivery of services to consumers,” said Cell C CEO Douglas Craigie Stevenson.
Under the terms of this finalised agreement, Cell C said it would be able to manage its network capacity requirements in a more scalable and cost-efficient manner.
Cell C said its new management team has been focusing on recapitalising the business and optimising its usage from the roaming agreement with MTN.
The mobile operator said it has secured additional funding, adding that the Buffet recapitalisation is also on track.