Saudi Telecom has written off a R1.2 billion investment in Oger Telecom, attributing the impairment to its investment in Cell C, according to a report by the City Press.
Oger Telecom owns 75% of Cell C, while Saudi Telecom owns 35% of Oger.
Reuters quoted Saudi Telecom’s chairperson as saying the group will be “evaluating options” relating to its international operations.
According to the City Press, Cell C CEO Jose dos Santos remains optimistic about the company’s future.
“Their (Saudi Telecom) results are their results, but for us it doesn’t affect us at all,” the paper quoted Dos Santos as saying.
Over the past two years, Cell C has aggressively chased after its competition through an all-out price war.
The move proved to be expensive but also bore fruit, with the operator increasing its subscriber base to about 19 million.
Despite this, analysts have predicted that the company’s days are numbered.
In November 2014, deputy chairman at Sasfin Securities David Shapiro said that Cell C never had the “deep pockets” to compete with Vodacom and MTN.
“My view is that you will not see Telkom Mobile or Cell C in a few years. It will only be Vodacom and MTN,” Shapiro predicted.
Cell C has just launched a high court process against the call termination regulations that were enacted on 1 October 2014.
The regulations – which replaced the previous regulations – give Cell C a smaller competitive edge over Vodacom and MTN with regards to Call termination rate asymmetry.
Call termination rates are the fees telecommunications providers pay one another to connect calls to each other’s networks, with asymmetry allowing smaller players in the market to charge more than larger operators.
The operator is also fighting against a merger between SA’s largest network operator, Vodacom, and fixed-line operator Neotel.
Cell C says the merger would root Vodacom as the dominant player in the SA market, and would kill of competition and smaller players.
Dos santos told the City Press that Cell C would release its financial results “in the coming weeks”.
You can read the full story in the City Press for 25 January 2015.