Will Cell C’s OOB data price hike help save it?

The recent increase in out-of-bundle (OOB) data rates at Cell C “comes as a shock”, according to Arthur Goldstuck, MD of  tech-focused research firm, World Wide Worx.

Speaking to MyBroadband, Goldstuck said the move was surprising because “it suggests that Cell C has given up the fight for the economically disadvantaged.”

Where the wealthy are able to get mobile data for as little as 2c per Megabyte (MB) on large bundles, the poor must pay between R1 and R2 per MB due to not being able to afford upfront bundles, Goldstuck said.

Cell C was a “shining exception” with its 15c/MB OOB rate, the analyst said.

“Now it has made a complete U-turn, abandoning the poor for whom it had claimed to be fighting.”

“A 99c/MB rate is indefensible in this country – and that applies to MTN as well as to Vodacom, with their R2/MB out-of-bundle rates,” Goldstuck said.

Plugging holes?

Speculation is rife that the move from Cell C may have something to do with the billions of Rands of debt the operator finds itself in; however, investor and CEO at Vestact, Paul Theron, says that it is difficult to say.

“Cell C is not listed, so its hard to know what’s going on there,” Theron said, adding that pressure from its key shareholder (Oger Telecom) could be a possible reason for the changes.

In 2013, Cell C received an injection of R5.7 billion from Oger Telecom – the Lebanese-controlled firm which indirectly holds 75% of the SA operator.

Oger later invested a further $350-million (around R3.5 billion) into Cell C, along with key lenders – including Nedbank and the Development Bank of South Africa – which provided R2.2 billion.

“[The shareholders] must surely want to see some consistent profits from the business?” Theron said.

Goldstuck said further that the OOB rate change doesn’t say anything about the kind of trouble Cell C may be in, but rather suggests that the company is fighting fires.

Would an OOB rate increase help get Cell C out of possible financial trouble?

“The increase will only help get it out of trouble if Cell C’s accountants believe it will do better with fewer customers,” Goldstuck said.

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Will Cell C’s OOB data price hike help save it?