Cell C wants to move its entire network to rival operator MTN and essentially become a high-level mobile virtual network operator (MVNO) as part of its turnaround strategy.
Chief executive officer Douglas Craigie Stevenson, shared the company’s plans with the Financial Mail.
Cell C is facing a challenging financial future after it recorded an after-tax net loss of R8.03 billion for the year ended 31 May 2019.
Blue Label Telecoms co-CEO Brett Levy said they drew a line in the sand by writing off their entire investment in Cell C to zero.
Despite this write-down, Levy remains upbeat about the mobile operator’s prospects, especially with the planned recapitalisation of Cell C through an equity partner.
He said that the recapitalisation will address Cell C’s debt problem and help the company to become profitable.
Moving Cell C’s entire network to MTN
In his interview with Financial Mail, Craigie Stevenson said Cell C is negotiating a new roaming deal with MTN which will see it carry all of Cell C’s traffic.
This new roaming agreement will also see Cell C hand all of its towers over to MTN, which means it will no longer run its own network.
This radical move means that Cell C will essentially become a high-level MVNO without its own network infrastructure.
This will remove the need for Cell C to invest billions in its network and allow it to use this money for operational expenses.
Cell C’s plan to move its network requirements to MTN and become a large MVNO has been confirmed by an executive close to the negotiations who asked not to be named.
He said such a deal would make financial sense for MTN and Cell C and allow the smaller operator to become more sustainable.
Craigie Stevenson said Cell C cannot carry on with its “capital-intensive model”, and that this deal with MTN would entail substituting capital expenditure for operational expenditure.
Since Cell C will use MTN’s network to serve its customers, it would allow the company to compete “on the basis of having the same geographical footprint and quality of service”.
Craigie Stevenson told the Financial Mail that the deal with MTN is expected to be finalised by the end of October.
Cell C has a bright future – Craigie Stevenson
Craigie Stevenson remains upbeat about Cell C’s future considering the value of the company’s assets.
He said that Cell C had valuable spectrum, a large customer base of 16 million active users, a wide distribution network, and a valuable brand – all of which it could leverage to improve its position.
The Cell C CEO said they are getting rid of costs, getting more efficient, and “understanding what a performance culture is all about”.
He said they are well aware that Cell C needs to be more efficient than Vodacom, MTN, and Telkom to recover and improve its position going forward.