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Seth Rotherham
  • Looks Like Cell C Is In Serious Financial Trouble

    25 Mar 2019 by Carrie in Business, Cell C, Communication, Mobile, South Africa, Tech/Sci
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    If Cell C is your service provider, you might want to keep an eye on the news.

    The mobile operator is now facing massive financial problems, including an R8,9 billion debt.

    Cell C’s poor financial position is aggravated by a net loss of R1,27 billion for the year ended December 31, 2018, reports MyBroadband.

    Their biggest shareholder, Blue Label Telecoms, which owns a 45% stake in the mobile operator, has been suffering in the market since they took the company on.

    Blue Label Telecoms finalised its recapitalisation of Cell C on 7 August 2017, which formed part of its plan to cut the mobile operator’s debt from R20 billion to R6 billion.

    It also announced ambitious plans to turn around the mobile operator’s financial fortunes, but the market was not convinced.

    Blue Label Telecoms’ share price plummeted from R17.04 when the deal was concluded to R3.58 on 20 March 2019 – a 78% decline in less than 2 years.

    The Blue Label Telecoms’ share price since August of last year is far from ideal:

    Stakeholders have now assumed a ‘ride or die’ attitude to solving the problem.

    Cell C has already seen drastic changes at the company since then, which include the departure of its CEO Jose Dos Santos on 1 March 2019.

    The company has also withdrawn its Miss South Africa sponsorship after five years as a major sponsor of the pageant.

    These changes are, however, mild in comparison to what industry sources said the company is considering: outsourcing its network operations to MTN.

    Yes, that Jose Dos Santos. Good riddance.

    A network management services agreement with MTN can save Cell C a ton of money, but they’ll have to get it past the Competition Tribunal first.

    The Competition Commission previously recommended that the Competition Tribunal prohibit a similar deal between MTN and Telkom.

    In this case MTN was planning to take over financial and operational responsibility for the rollout and operation of Telkom’s RAN, with reciprocal roaming agreements.

    In the meantime, Cell C is confident that it can become financially sustainable.

    …its hopes hanging on a deal with the Buffet Consortium – which is backed by billionaire Jonathan Beare.

    In February 2019, Blue Label Telecoms announced that Cell C has “concluded a binding term sheet” with The Buffet Consortium which will see it become a minority shareholder in the mobile operator.

    Good luck to them, but R8,9 billion is quite a hole to climb out of.

    [source:mybroadband]

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