Cell C increases subscriber base by 27 percent

Cell C today announced positive half-year results (including Virgin Mobile South Africa), exceeding EBITDA targets for the period January to June 2007.

CEO, Jeffrey Hedberg attributed the strong showing to the robust nature of the company’s turn-around strategy.

Gross profit at R1.3 billion was 23% higher than the first half of 2006, while EBITDA registered a 37% increase to R346 million. Further reflecting the strong footing in EBITDA is the growth of 106% in quarter two from quarter one 2007.

Blended annual average revenue per user or ARPU (including Community Service Telephones or CSTs) increased to R152 from R151.

Hedberg commented, “For the first six months of the year, Cell C has met or exceeded its EBITDA target every single month. This is a good start and a long overdue achievement, proving that our new strategy is paying off and that our focus on value for money and operational efficiency is improving margins while driving demand for our product offerings.”

The 18% increase in overall revenue from R3 billion in the previous reporting period to R3.6 billion at the mid-year was primarily attributed to the larger subscriber base, increases in airtime and access revenue as well as a boost in interconnect revenue.

Total connections improved by 27% from 2006 to 3,4 million active subscribers, comprising 2,166 000 pre-paid, 1,144 000 post-paid and 110 000 Community Service Telephone lines.

Cell C’s network was expanded to a total of 2 171 base stations. The operator now carries 86% of its traffic on its own network. Now covering 86.5% of the population and 29.8% of the geographic area, Cell C has exceeded its final licence requirements of 60% population coverage and 8% geographic coverage, well ahead of the required deadline.

Hedberg pointed out that although Cell C was delivering value to its customers, the market remains characterised by fierce competition and an imprecise regulatory environment.

“That said, our position towards the abuse of a dominant position and discriminatory pricing as it relates to one of our competitors has been vindicated by the Competition Commission and we look forward to the outcome of the Competition Tribunal hearings,” said Hedberg.

Products and Services

Connecting with Cell C is getting easier as the company continues to innovate and deliver on easy to access and affordable products which meet the needs of all its customers.
Our fresh marketing approach continues to strengthen our uniquely South African brand and supports our growth plans.

The Hola 7 prepaid starter pack, a joint effort with personality Zola, achieved 60 000 new connections on only two distribution channels during its first two months in the market, while the Woza Weekend initiative, offering South Africans free on-net calls during weekends has become a runaway success.

“We believe that by launching these products we are creating loyalty mechanisms in the prepaid market and most importantly, reducing churn in this profitable segment. In doing this, we will be able to grow our revenues significantly whilst maintaining our current cost base,” said Hedberg.

Improving customer care constitutes an integral part of the Cell C turn-around strategy. As such, the company has invested heavily in its call centre operation.

“In an effort to deliver efficient, responsive and cost effective service to our customers, emphasis is being paid on best of breed systems, robust and customer focused processes, measurement and dedicated and diligent people,” noted Hedberg.

“The tremendous success of the offerings that we’ve put into the market during the first half of 2007 proves that there is a significant demand for affordable and value for money products. That is the gap that Cell C intends to fill and we are pleased with the positive results that we are already seeing in this regard.”

“Our significantly improved performance during the past six months is proof that our turn-around strategy is gaining traction and indeed taking this company to new levels of success. Driven by a dynamic and focused workforce, a new management team and a fierce will to succeed, we are confident that Cell C will continue to enjoy strong growth in the future,” Hedberg concluded.

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Cell C increases subscriber base by 27 percent