Cell C is winding down its radio access network as its expanded roaming agreement with MTN allows it to leverage the bigger operator’s infrastructure.
This is according to CEO Douglas Craigie Stevenson, who said that the move was necessary to improve the operator’s efficiency.
Speaking in an interview with MyBroadband – following Cell C’s results presentation for the year ended 31 December 2019 – he said Cell C would focus on its customer experience and reducing expenses going forward.
“We have a transition period that will take place over the next few years,” Craigie Stevenson said. “We keep our spectrum, we keep our core network, we keep our billing system, we keep our platforms – we keep all of those things.”
“We will transition out our existing radio access network and bring in the new one, and with that comes the quality of service and everything that goes with it.”
“For a subscriber, it is going to be fantastic service delivery as we can compete like-for-like with any of the other networks because we have got exactly the same thing,” Craigie Stevenson said.
Not an MVNO
When asked about what Cell C’s plans were for its spectrum and customer base, Craigie Stevenson stressed that the company would not become a mobile virtual network operator (MVNO) – it would simply not own its own radio access network.
“We are not becoming an MVNO, I must be clear about this. We have got our own spectrum, licence, number range, brand, customers, and core billing,” he said. “It is really only the radio access network.”
“We are not an MVNO or a ‘Super MVNO’ – we are just expanding our roaming agreement with MTN. We have an existing roaming agreement in the rural areas and we are just expanding that.”
He said the costs required to build and run a radio access network are prohibitively expensive and the local ICT industry will begin to converge around service-focussed products running on shared infrastructure.
“You are going to have two major infrastructure suppliers – MTN and Vodacom – but the rest of the ICT industry is going to start converging.”
“Cell C can’t be in capital expenditure, we never could have been,” Craigie Stevenson added.
“If you gave me R20 billion tomorrow morning, it would be the most stupid thing to shove it into a radio access network.”
Loss and turnaround plan
Cell C reported a R3.9-billion loss in its latest annual results, although its performance increased significantly in the last six months of the period.
“Operationally the business is stronger and a successful recapitalisation will secure the long-term sustainability of Cell C,” Craigie Stevenson said.
Cell C saw a significant loss in subscribers over the past year, with its prepaid and postpaid customer bases dropping by 21% and 5% respectively.
“Although there was a decrease of 2.9 million prepaid customers in the 12 months to 2019, the margin on our existing customers is better as a result of acquiring profitable customers and not signing on a customer at any cost,” said Cell C CFO Zaf Mahomed.
“Revenue from equipment sales, on a year-on-year basis, was 27% down as we moved away from subsidising customers at all costs.”
Cell C is now an operationally-sound business that is financially viable and competitive, Craigie Stevenson said.