Cell C is close to the finish line

Cell C’s recapitalisation is progressing well and is expected to be finalised by the end of the year.

This is according to Blue Label Telecoms joint CEO Brett Levy, who was speaking during the company’s financial results presentation for the year ended 31 May 2020.

Blue Label is a majority stakeholder in Cell C, and its annual results subsequently included information regarding the performance of the network.

The update provided by Blue Label showed that Cell C had lost nearly a third of its subscribers between June 2019 and May 2020, but its service revenue only declined by 2% during the reporting period.

This is because the loss on subscribers has resulted in an increase in the quality of its customers, Blue Label said.

Discussions around a recapitalisation plan for Cell C – which was written down by Blue Label last year after posting an R8-billion loss – are ongoing, and Levy said that the company plans to complete this in 2020.

“What we are planning for internally is we want to get the recapitalisation over the line, which we are expecting to complete this year,” Levy said.

“All the stakeholders over the last two months have been really cooperative and have been playing ball to get this over the line and finalise Cell C’s recapitalisation.”

He added that the complex nature of the recapitalisation deal has resulted in it taking longer than expected.

“This deal is and has been very complicated,” Levy said.

“To just put it briefly, we have dealt with two Chinese banks, two Chinese vendors, American bondholders, Lebanese banks, Lebanese bondholders, and South African banks.”

“To get everyone around the table to agree on the final umbrella agreement has proven to be a lot more difficult than we ever envisaged and has taken a lot more time,” he said.

He said that they have made significant progress in the last three to four months, however, and that they are close to finalising a term sheet.

“We really believe we are going to recapitalise this business this year,” he said.

What recapitalisation means for Cell C

Cell C has made a number of changes to its operations this year, including shutting down physical stores and shutting down parts of its radio access network.

The winding down of its cellphone towers is part of its plan to roam entirely on MTN’s mobile network, which will be enabled by an expanded roaming agreement that was recently signed between the two companies.

MTN CEO Rob Shuter previously said that the pace of Cell C’s migration off of its own infrastructure and onto MTN’s network would depend on how quickly the other mobile operator’s recapitalisation could be completed.

Shuter shared Levy’s expectation that this process would be completed by the end of the year, stating that Cell C seemed to be progressing well.

These optimistic executive outlooks are balanced by that of a number of analysts, who told MyBroadband that there were concerns over Cell C’s potential to compete in the South African telecommunications market.

The best-case scenario for Cell C, one analyst said, is to merge with or be acquired by another telecoms company.

Now read: Cell C lost nearly a third of its customers