MyBroadband has learned that Cell C and MTN are developing emergency plans to ensure Cell C subscribers stay connected in the event of the company going bankrupt.
Cell C is under severe financial pressure and has been forced to delay its debt payments and hire consultants to probe its business practices.
The company’s interim CEO Douglas Craigie Stevenson said its challenges include a large debt burden, the cost of debt, liquidity problems, and poor business performance.
Stevenson also unveiled a turnaround plan which includes a recapitalisation programme, extracting greater value from its roaming agreement and optimising its network revenue and usage.
Money desperately needed
Industry insiders told MyBroadband that Cell C’s financial challenges are not easy to overcome and that they desperately need money to survive.
The main reason is the company’s mountain of debt. It remains Cell C’s biggest challenge and has been a millstone around the company’s neck for over a decade.
Unless the operator can find a way to manage its debt more effectively, industry players said, it faces a real threat of bankruptcy and even closing down.
A well-placed industry source told MyBroadband that Cell C and MTN (Cell C’s roaming partner) are making “emergency plans” to prepare for Cell C potentially going bust.
While details about these plans remain sketchy, it is understood that they include keeping Cell C subscribers connected if the operator can no longer serve them.
Cell C and MTN, however, are not keen to comment on this issue.
MTN said any questions related to the Cell C business should be directed to that company.
“Cell C is an important contributor to the telecommunications sector in South Africa and we trust every possible solution will be considered to ensure the company’s ongoing contribution to the economy,” MTN said.
Cell C also sidestepped questions about the emergency plans and focussed on its turnaround plan in its feedback.
“Cell C is actively working on concluding the Buffet Consortium transaction together with a further income-generating deal to restructure the balance sheet to increase liquidity and deliver improved network efficiency and cash flow,” the company said.
“The negotiations are progressing well, and we look forward to updating the market on the progress of our transactions as soon as we are able to.”