Cell C posts strong results
Cell C, the mobile cellular phone operator, has posted a 54% rise in its earnings before interest, tax, depreciation and amortisation (EBITDA) to 134.5 million rand in the third quarter of its financial year to end-September 2005 versus 87.7 million rand in the second quarter of the year, the group says.
Total revenue for the quarter came in at 1.422 billion rand, a 35% increase from 1.05 billion rand a year earlier, while the group’s market share in terms of revenue rose by 13.8% y/y, it reported, to 9.9% for the six months to end-September from 8.7% a year earlier.
The revenue increase was primarily attributable to a larger subscriber base, increase in airtime and access revenue, and an increase in interconnection revenue.
Cell C finished the quarter with an active base of close to 2.7 million subscribers, consisting of 2.1 million prepaid subscribers, 610,000 postpaid subscribers and over 28,000 CSTs, it said.
During the third quarter it had connected 441,000 prepaid subscribers, 62,000 postpaid subscribers and over 28,000 CSTs.
The group had conceded 0.3% prepaid market share but gained 0.5% postpaid market share during the quarter, with the improved market share a result of having achieved a 22% share of net additions. Postpaid accounts now account for close to 23% of the Cell C subscriber base.
Cell C’s average revenue per unit (ARPU) across all subscribers improved to approximately 153 rand from 142 rand a year earlier, it said.
Talaat Laham, Chairman and CEO, welcomed the results, stating: "Cell C has succeeded in bringing significant competition to the South African market. This can be seen in our excellent year on year growth, with strong improvements in subscriber numbers, revenue and operating profit."
"We are pleased to be celebrating our fourth birthday as a strong market challenger with over 2.7 million current customers."
Muhieddine Ghalayini, Chief Financial Officer of Cell C, added: "Cell C’s strong year on year and quarterly top line and EBITDA growth are indicative of our solid business fundamentals and the extent of the market opportunity. With Cell C gearing up to offer even better levels of service and a continued strong market outlook in the build up to Mobile Number Portability, we look forward to continued strong sales translating into further growth."
They added that discussions with the UK-based Virgin Mobile to form a joint venture service provider in South Africa under the Virgin Mobile brand were "progressing well" and they expected to be able to make an announcement on the project before the end of the year.
Over 80% of Cell C traffic was carried on the company’s own network, which now covered 63% of South Africa’s population and 8.7% of the geographical land area, well ahead of its 2007 license requirements of 60% and 8%, respectively.
The group was also performing well on its licence obligation to roll out 52,000 community service telephones (CSTs) to under-serviced areas by 2008, having installed over 28,000 already, it said.
Cell C was also looking forward to the introduction of mobile number portability at the end of June 2006, which it believed would benefit consumers and remove a significant barrier to competition, it noted.
During the quarter, Cell C finalised its 500 million rand three-year revolving credit facility with Nedbank, which would be used to fund future capital spending, working capital and to meet its debt service obligations, the group concluded.
Cell C’s majority shareholder is Oger Telecom, a subsidiary of Saudi Oger.
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