Why Cell C terminated its agreement with Makro, Dion Wired, and Game

Dr Who

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Jun 4, 2010
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The truth is due to the cost of the channel. They like other providers all do this from time to time. Cell C have done it with owner managed stores and 3rd party distribution agreements on many occasions.

Below is a typical contract:
CIB - rebate for the sale at RX
Annuity revenue stream - Between 3% and 20% depending on contract and requirements

if you use the analogy of a dam, you will have a constant in flow of new activation which will over time evaporate ( churn ) and soon the evaporation equals the inflow and the dam never gets bigger. AT this point the companies would have significant annuity streams which fund the base. However these streams are also linked to the contract and stop when Cell C terminates.

So you as a company work hard for 3 years growing the annuity side of the base to 20% of your invoice, Cell C can then terminate after 3 years and another company will start from zero.
 

skusku

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Oct 24, 2009
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So Cell C wants the clients to get accurate information about their products from the retailer... So what in their minds had them thinking that JET and EDGARS (which sells CLOTHES) knows more about selling cellphones than Makro....???
Kinda speechless.
 

Pixelbender

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Jul 5, 2009
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So you as a company work hard for 3 years growing the annuity side of the base to 20% of your invoice, Cell C can then terminate after 3 years and another company will start from zero.
What? You mean like Uber does with drivers, using them to build up enough cash to release tons of automated vehicles... Just except this time, there wont actually be a place to start over from.
 

BBotha

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Nov 21, 2006
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And I noticed that they also slashed the number of phone manufacturers they now sell.
 

ToxicBunny

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I can only actually imagine that this is partly due to MassMart squeezing the living daylights out of CellC from a rev share point of view.

This will pretty much only hurt CellC in the long run.
 

Dr Who

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Jun 4, 2010
Messages
640
Yes , I spent many years in the industry and had these types of discussions. Annuity will increase the cost to acquire for any company. A new company will have a zero base and thus be cheaper.
 

The_Librarian

Another MyBB
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Time to ditch any CellC contracts, and switch over to prepaid then.

On it.
 

Sodan

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Nov 25, 2010
Messages
2,755
The truth is due to the cost of the channel. They like other providers all do this from time to time. Cell C have done it with owner managed stores and 3rd party distribution agreements on many occasions.

Below is a typical contract:
CIB - rebate for the sale at RX
Annuity revenue stream - Between 3% and 20% depending on contract and requirements

if you use the analogy of a dam, you will have a constant in flow of new activation which will over time evaporate ( churn ) and soon the evaporation equals the inflow and the dam never gets bigger. AT this point the companies would have significant annuity streams which fund the base. However these streams are also linked to the contract and stop when Cell C terminates.

So you as a company work hard for 3 years growing the annuity side of the base to 20% of your invoice, Cell C can then terminate after 3 years and another company will start from zero.
Forgive my slowness, but I don't fully understand what you're saying here, and really would like to. Might I trouble you by asking for an example with yearly numbers so I have a concrete example to refer to?
 

Swa

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Forgive my slowness, but I don't fully understand what you're saying here, and really would like to. Might I trouble you by asking for an example with yearly numbers so I have a concrete example to refer to?
Not sure if this is what he is referring to but when Vodacom and MTN started in this country they needed a way to quickly reach the masses. They then came up with a dirty little plan few people actually know about.

They partnered with various distribution channels, Nashua and Autopage being the main ones. If you go to one of their cellular shops they'll tell you which of these is your service provider and NOT Vodacom even if you bought your sim at a Vodashop. These service providers own your sim card in all practical aspects. What it means is that whenever you load airtime on a sim the SP gets a cut.

For instance if your SP is Autopage they may get like 10% of the airtime value. They in turn have various distribution partners. If the sim is sold by one of these partners they get like 5% of the airtime value from Autopage. And so forth down the chain everyone gets their part, even the Vodashop owner gets it through the SP. This is why sellers would give you a phone at cost price but then sell you a mandatory sim card with it you are obligated to use, because if you didn't they don't make any profit.

Further when you buy airtime a percentage already goes to someone else. 5% may go to the seller so if they sell R100 airtime they only pay R95 for it. Another 5% can go to the distribution partner so the R95 the seller pays only costs them R90. Vodacom and MTN don't sell that airtime and if you call them there isn't even anybody in the entire organisation that can help you.

This method is actually redundant now and Cell C has been trying to get rid of it. The first step was the sim cards with data they sold through their own shops. This is likely the next step, selling contracts and prepaid sim cards through their own channels.
 

abbott10k

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Jul 3, 2013
Messages
412
And I noticed that they also slashed the number of phone manufacturers they now sell.
They seem to be getting worse with each decision they make, am struggling to find an upgrade phone for my daughter. There's practically nothing to buy from them under R200pm. They've lost the plot!
 

Swa

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May 4, 2012
Messages
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Funny how many people are saying how bad Cell C has gotten. Seems we have two kinds of people here. Those who want everything in a provider but complain about being ripped off, then those who just want good basic services at a fair price.
 

ToxicBunny

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Funny how many people are saying how bad Cell C has gotten. Seems we have two kinds of people here. Those who want everything in a provider but complain about being ripped off, then those who just want good basic services at a fair price.
Well cell c fall squarely into the ripping off and provide crud service category
 
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