100 000 mark
The company released its subscriber numbers for the first time this week, with CEO Peter Boyd saying the 100000 mark was passed “a few weeks ago”.
MTN, alone, is signing up customers in SA at the rate of 6077 a day.
Despite the low figure, Boyd said Virgin Mobile was on track with its targets and saw it as an internal milestone worth celebrating. “It’s about right in terms of the business plan that we have gone through since I joined,” he said.
The company had previously refused to issue its subscriber numbers, fuelling speculation that it was struggling to crack even the 10000 mark.
Virgin runs as a virtual operator over Cell C’s network and both companies are equal shareholders in the venture. Neither will say how much they are pumping into the operation and Boyd said it would be silly to talk about achieving a profit so soon after its launch last June.
“There is a path to profitability but it’s medium term,” he said.
Virgin will be hoping to achieve a profit more rapidly than Cell C, which has yet to do so after six years in business.
Cell C reported a 19% increase in revenue to R6,5bn for the year to December 31, but CEO Jeffrey Hedberg blamed the joint venture with Virgin for eroding its profits. Cell C’s earnings before interest, tax, depreciation and amortisation (ebitda) dropped 15,3%, from R541m to R458m. The gross profit, however, had risen 18% to R2,3bn through serving 3,3-million subscribers.
Boyd said that Cell C had the right to “ascribe various reasons for their financial performance”, but both partners had been fully aware of their group’s cash commitments.
Their relationship was good and Cell C’s shake-up of its own business plans would not jeopardise that, said Boyd.
Both Boyd and Hedberg were brought in to replace the previous CEOs at Virgin Mobile and Cell C last year, in efforts to hone and revitalise the performance of the companies.
There is speculation that Cell C’s main shareholder, Saudi Oger, may sell its stake to another operator or investor because no profits are in sight yet.
Cell C has confirmed that potential suitors regularly make overtures, without citing any specific bids.
Virgin issued its subscriber figures for the first time to coincide with a new advertising campaign calling for more transparent and simpler cellular deals.
“There are more than 100 packages to choose from and it’s frequently hard to compare them, so you don’t know what value you are getting,” said Boyd.
It has streamlined its offerings to four basic packages and is targeting fairly high-spending users who spend more than R100 a month. “The big talkers and big SMSers are the people we really think we can save money for … Virgin Mobile is very young but it’s old enough to know what people want.
We have done a lot of consumer research and hopefully this will have an effect on the gross additions.”
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