Cell C turnaround drive set to lift profit by 30%
Newly appointed chief financial officer Fabrizio Mambrini forecast "quite outstanding" growth in revenue after the third local cellular licensee last year launched a drive to boost subscriber numbers and pull itself out of the red.
"The company has made quite significant improvement in 2007 already. I would say this will be reflected in quite outstanding results," he said.
"Growth in revenue and Ebitda [earnings before interest, tax, depreciation and amortisation] is quite outstanding."
Unlisted Cell C, which releases its full-year results next month, has struggled to carve out a space in the domestic market and has been weighed down by enormous debts.
Standard & Poor's downgraded its long-term rating to B- last year, but Mambrini said Cell C was comfortable with the level of debt on its books.
"The debt is an effect and not a cause. Debt is an effect of efficiency," he said.
"Our target is to increase efficiency of the company."
He said Cell C could benefit from plans by Saudi Arabia's Oger Telecom to buy a stake in the fixed-line company, Telkom.
Oger owns a majority stake in Cell C and has experience in Turkey. Last month Telkom confirmed that it had received a non-binding offer from Oger, but said it was not yet in talks with the Saudi company.
Five years since its launch, Cell C has yet to turn a profit. It has shareholder loans of nearly R5 billion and about $800 million (R6.25 billion) in high-yield euro- and dollar-denominated debt.
Mambrini said its recovery strategy, which includes promotions such as a partnership with musician Zola to sell branded SIM cards, and a plan to focus on the lower end of the market, had borne fruit.
Cell C had 3.3 million South African subscribers at the end of June last year, compared with about 14 million for MTN and Vodacom's 24 million.
Mambrini said he saw room for growth despite talk that the South African market, with up to 80 percent cellphone penetration, was saturated. He said this did not take into account movement between servers.
Demand depended on the overall economy, which Mambrini said was fairly buoyant despite a recent slowdown.
"South Africa is the land of opportunity. Here we're having rates of growth that you're not having at all in Europe."
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