Virgin marriage teeters
The lacklustre performance of Virgin Mobile South Africa has led to a call for Cell C to pull out of its 50 percent joint venture.
Cell C and Richard Branson’s Virgin Group launched Virgin Mobile SA in 2006.
Last week investment advisory firm Delta Partners said that an acquisition of Cell C would become the catalyst to disband the Virgin Mobile SA operation.
Telkom and Kuwait-based Zain have been named as potential buyers of Cell C.
It has been a challenging three years for Virgin Mobile SA. It has failed to sign up the millions of subscribers it expected and has changed chief executives twice.
Its third chief executive is Steve Bailey, a former executive at Cell C.
Cell C took the reins at Virgin Mobile SA in 2008 when Cell C chief executive, Jeffrey Hedberg, was appointed chairman of the joint venture at the end of Virgin Group’s one-year tenure.
Since its inception Virgin Group has brought in its own people to head the local operations but a source said they had unfortunately overestimated the local market and failed to deliver.
According to insiders Virgin Mobile SA is selling its branded stores to focus on its core business as a virtual network operator. Once that’s done it will revert to its initial strategy of focusing on the high-end market rather than the low-end market Cell C is vying for.
Cell C still believes the venture is ideally positioned to attract high-end customers, with its "strong brand to smell, look, and taste different from normal post-paid offers. Their enthusiasm can be contagious!"
Cell C said on Tuesday that, as a shareholder, it had always wanted to see a better performance, and the introduction of Bailey "has injected significant and positive changes to Virgin Mobile’s operations".
It said it was committed to Virgin Mobile SA as long as the operational and financial performance improved steadily.
That begs the question: if there is no improvement, will Cell C call it quits?
Should Cell C leave Virgin Mobile venture? – give your views
Business Report
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