All Cell C network traffic will move to MTN – But not until it can pay its bills

MTN will migrate all of Cell C’s network traffic onto its own radio network once the mobile operator has completed its recapitalisation.

The company confirmed the migration in its interim results for the six months ended 30 June 2020, stating that the current arrangement “envisages a three-year transition towards a full national roaming arrangement under which MTN will carry all of Cell C’s network traffic”.

This process is already taking place under what is called “phase two” of the roaming agreement between the two mobile networks, but MTN Group CEO Rob Shuter said that investment in this strategy will not be significantly increased until Cell C’s financial situation has stabilised.

Shuter told MyBroadband that “phase one” of the roaming agreement was the sale of excess capacity in peri-urban and rural areas to Cell C, with the other mobile operator maintaining its network in the metros.

“The idea in phase two is that we will also open up roaming in the metros and, over time, they could transition their radio access network (RAN) traffic onto our infrastructure, which would mean that they could decommission their tower infrastructure.”

He noted that Cell C will still run a core network, as only its last-mile radio access network will use MTN’s infrastructure.

This is in line with previous comments by Cell C CEO Douglas Craigie Stevenson, who said that Cell C would wind down its radio access network over the next few years.

“We are not becoming an MVNO, I must be clear about this,” Craigie Stevenson previously told MyBroadband. “We have got our own spectrum, licence, number range, brand, customers, and core billing.”

Shuter reiterated that Cell C will still own its own spectrum and have its own ECA licence, but added that there may be some usage of Cell C’s spectrum by MTN in future.

“The question is – what will the spectrum be used for? One option is for us then to potentially push some of our excess traffic onto that spectrum by a kind of reverse roaming agreement,” he said.

This will not be a possibility for quite some time, however, as phase two’s implementation is hindered by Cell C’s financial position.

Three months behind

Shuter noted that for this strategy to work, it needs a sustainable Cell C.

Referring to the migration of Cell C’s network traffic to MTN’s infrastructure, Shuter said it will be a “win-win situation”.

“It will be much more sustainable for them because they won’t have to manage the tower infrastructure, we do have excess capacity, and we will secure more spectrum going forward.”

Cell C’s recapitalisation is key to furthering the implementation of “phase two”, as well as paying back the money it owes to MTN for its ongoing roaming agreement.

MTN’s results showed that as of 30 June, it had not recognised R673 million in roaming payments from Cell C, which equates to around three months’ of billing.

“We said that at the end of the half we booked R788 million of revenue and R673 million that was unpaid, which means we haven’t recognised that as revenue,” Shuter said.

“I guess that is somewhere around three months’ worth of billings.”

He added that the recapitalisation was progressing well, however, and feels that this situation would be resolved by the end of the year.

“The intention is that they will catch up with that as part of the recapitalisation event,” he said.

“I wouldn’t say we have an ironclad guarantee – I don’t think any Cell C funders have got an ironclad guarantee – but certainly the business has been stabilised and the management team have done a good job.”

Once this recapitalisation has completed and Cell C’s financial position is stronger, Shuter said investment in the expanded roaming agreement will be able to increase significantly.

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All Cell C network traffic will move to MTN – But not until it can pay its bills