Cell C comeback on the cards

South African mobile network Cell C says 2024 was a period of significant stabilisation for its business and that its brand was now well positioned for sustainable growth.

The mobile network operator has been in a dire financial position for several years, forcing Cell C’s shareholders — led by Blue Label — to rescue the company through a complex recapitalisation process.

That necessitated mass layoffs and store closures as well as the shutdown of its own radio equipment infrastructure, effectively converting the company from a mobile network operator (MNO) to a full mobile virtual network operator (MVNO).

As a full MVNO, Cell C remained in control of its own radio frequency spectrum and core network. It also continued to offer mobile virtual network enablement services to MVNOs like Capitec Connect and FNB Connect.

Transitioning from competing against Vodacom and MTN to buying wholesale services from them was part of a strategic shift.

Vodacom and MTN pour around R10 billion into their South African networks every year, and Cell C decided that it would be impossible to catch up to that level of investment.

However, switching off its radio access network was one of the least painful decisions the company made.

Between 2020 and late 2023, the company’s staff complement shrunk from 2,600 to 900.

It also lost millions of customers, resulting in Telkom overtaking Cell to become the third-biggest operator by subscribers in late 2020.

In its most recent financial year, Cell C reported a loss of R2.3 billion, when excluding the impact of a debt release in which it repaid creditors 20 cents to the rand in outstanding debt.

In addition, its assets of R14.1 billion were still lower than its liabilities of R17.3 billion, meaning it remained technically insolvent.

However, Cell’s negative equity of R3.2 billion was a slight improvement over the R4 billion figure from 2023, suggesting it is making progress in sorting out its balance sheet and returning to solvency.

Based on market movements, investors appear confident that the company’s turnaround is working. The share price of its majority shareholder — Blue Label — has climbed over 50% in 2024.

Over the same period, the share prices of larger mobile networks — Vodacom and MTN – have struggled.

The operator told MyBroadband that its turnaround efforts were driving topline growth and positive financial performance momentum.

Key to the company’s steady recovery was the appointment of Vodacom veteran Jorge Mendes as Cell C CEO from July 2023.

Mendes has pulled in former colleagues from Vodacom to bring new experience and skills to the table.

The company highlighted that it now had a full executive committee in place and continued to build further management capacity with a fit-for-purpose organisational structure.

“This will strategically combine external expertise with internal talent to foster a customer-focused, high-performance culture,” Cell C said.

Network changes give customers best of both worlds

One of the biggest changes that Cell C underwent in 2024 was the completion of its migration to a virtual radio access network (RAN) maintained by MTN, instead of running its own radio equipment.

Cell C said this capex-light model had optimised its operational and cost efficiency.

“We successfully renegotiated network agreements to ensure the best quality service and commercially sustainable constructs,” Cell C said.

“These efforts ensure financial sustainability while providing customers access to over 28,000 4G-enabled towers nationwide.”

Cell C said the transition had yielded positive results and that it could now offer its customers access to the best and most reliable networks.

MyBroadband Insights found that the transition had resulted in Cell C’s network performance improving well ahead of the other major networks.

Cell C said it will continue to build on this improvement, including with the implementation of Multi-Operator Core Network upgrade.

That will allow customers’ devices to switch seamlessly between operators based on which provides the best performance.

Cell C also successfully completed its first Voice-over-LTE (VoLTE) call, which was made possible through a partnership with ng-voice and Amazon Web Services (AWS).

“This marks a pivotal step towards offering VoLTE, Voice over New Radio, and Voice over Wi-Fi services to local customers,” the company said.

Rebranding and product refresh

Cell C also announced a rebranding and new logo in August 2024.

The operator said this is part of its refocus on addressing specific customer tensions and creating emotional connections with customers.

The company is currently revamping retail stores nationwide to offer customers a modern, interactive environment designed around their needs.

It also made several specific product changes to improve the customer experience, including My Connecta Deals to give customers the best value, choice, and transparency, simplified journeys and experience.

Cell C also revamped USSD with personalised offerings based on customer profiles and preferences to keep this channel relevant and user-friendly.

In addition, it launched a system that allows WhatsApp-based porting within minutes. It also upgraded its billing system for prepaid customers.

“This is a new-age platform to provide higher quality services and a better customer experience,” Cell C said.

“It will also improve operational efficiencies for our internal teams and eco-system partners.

Cell C also told MyBroadband that its mobile virtual network operator (MVNO) division remained strong, supporting wholesale revenue that increased its overall growth.

“We have commenced with the expansion of our enterprise division, which previously had no footprint, diversifying our revenue streams and reinforcing our market position,” Cell C said.