Cell C needs data strategy to compete
Cell C, which publishes annual results today, needed to urgently develop a mobile data strategy if wanted to compete better against its cellular rivals in South Africa, analysts said yesterday.
Unlisted Cell C, which has been operating for five years, has yet to turn a profit and continues to lag behind bigger competitors Vodacom and MTN.
Richard Hurst, an analyst at global advisory firm IDC South Africa, said Cell C needed to develop a mobile data strategy to drive up its average revenue per user, which measures how much each subscriber spends on cellphone calls and sending data.
"I am keen to see them [Cell C] outlining their strategy in South Africa in a market that is maturing," Hurst said. "The window of opportunity is closing. If they don't up their game they will remain a poor cousin to both Vodacom and MTN."
Mobile data revenue has enhanced profit growth of Vodacom and MTN.
Data services are delivered through a third-generation (3G) technology infrastructure, which enables cellphone users to make video calls and connect to the internet using a 3G card.
Dobek Pater, a telecoms analyst at Africa Analysis, said Cell C had made no technological progress and had not developed its own 3G infrastructure.
By the end of June 2007, Cell C had 3.3 million South African subscribers, compared with Vodacom's 24.3 million and MTN's 14 million subscribers.
Saudi Arabian group Saudi Oger holds a majority stake in Cell C, which has about $800 million (R6.3 billion) in high-yield euro and dollar-denominated debt and shareholder loans of nearly R5 billion.
Earlier this year Cell C chief financial officer Fabrizio Mambrini said the group expected to report a 30 percent rise in its core profit, benefitting from a turnaround plan.
But Pater said Cell C had yet to prove its profitability.
However, he expected the company to indicate a healthy subscriber base benefiting from its strategy to focus on the lower end of the market and good performance from its community service telephones.
Cell C has partnered with musician and television personality Zola to sell branded SIM cards. It launched a R5 airtime voucher known as HalfTiger and Woza Weekend – a recharge for as little as R10 during the week and talk for free on weekends.
Pater was concerned about the quality of these subscribers, who may have used less expensive weekend calls.
Cell C is also in partnership with Virgin Mobile South Africa, which piggybacks on Cell C's network as an enhanced service provider.
"A question in our mind is to what degree is co-operation and cannibalising taking place," Pater said.
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