Cell C CEO Douglas Craigie Stevenson has outlined the company’s turnaround plan and reflected on the previous business model following its financial results for the year ended 31 December 2019 being released.
In its results presentation, Cell C reflected a net loss after tax of R3.94 billion, although its turnaround strategy saw it improve its financial position in the last six months.
Compared to the first six months of 2019, gross profit increased by 9% and EBITDA more than doubled to R1.7 billion in the last six months.
Cell C’s turnaround strategy is focused on operational efficiencies, including cutting costs that do not translate into revenue generation and minimizing its operating expenses.
Speaking in an interview with MyBroadband, Craigie Stevenson said the company’s new business model would forgo excessive capital expenditure and the inefficiencies of the past.
“Old” vs “New” Cell C
Cell C said it will wind down its own radio access network as it expands its roaming agreement with MTN, which would allow it to become far more efficient.
“It is a huge opportunity for us to cross-skill and upskill staff and to grow,” Craigie Stevenson said.
“At the end of the day, it is really our radio access network that we are getting out of because we could never strategically keep up with the capital investment required.”
“That was something that should have been realised in this business years back, not just now.”
He said the original strategy was for Cell C to compete against Vodacom and MTN’s network rollout while roaming on the larger operators.
“The truth of the matter was, you never had the quality of service, you were going for a customer base you would never be able to get because your quality of service was inadequate and your coverage was inadequate.”
“And, under the old roaming dispensation, it was a roaming transaction so you had to go off the one network and onto the other. It was a complete disaster.”
Craigie Stevenson said that as part of its reorganisation, Cell C would do its best to upskill and cross-skill staff and continue to improve the efficiency of the business.
“You can’t forget where Cell C was. As a business, it was hopelessly inefficient,” he said.
“At one stage we had probably around 2,900 staff. You compare that to Vodacom and MTN, and it does not make any sense.”
“As part of the recapitalisation, we will fund an upskill and a cross-skill process to get us to the next level.”
“I can’t definitely say we won’t lose jobs, but I can tell you we will do a lot to make sure we cross-skill and upskill our existing staff – especially the technical divisions.”
Craigie Stevenson also pointed to his discontinuation of Cell C’s Black streaming service as a move to improve the efficiency of the business.
“I mean, at the end of the day to spend the kind of money that they wanted to… I had to can it. There is no point in throwing good money after that,” he said.
“Someone has to be sober as a business to say I don’t care what Vodacom, MTN, and Telkom are doing, quite frankly.”
He said Cell C has been very successful in being a customer-first mobile operator and aims to build on this as it repositions its business.