Cell C, which publishes annual results today, needed to urgently develop a mobile data strategy if wanted to compete better against its cellular rivals in South Africa, analysts said yesterday. <\/p>\n
Unlisted Cell C, which has been operating for five years, has yet to turn a profit and continues to lag behind bigger competitors Vodacom and MTN. <\/p>\n
Richard Hurst, an analyst at global advisory firm IDC South Africa, said Cell C needed to develop a mobile data strategy to drive up its average revenue per user, which measures how much each subscriber spends on cellphone calls and sending data. <\/p>\n
"I am keen to see them [Cell C] outlining their strategy in South Africa in a market that is maturing," Hurst said. "The window of opportunity is closing. If they don't up their game they will remain a poor cousin to both Vodacom and MTN." <\/p>\n
Mobile data revenue has enhanced profit growth of Vodacom and MTN. <\/p>\n
Data services are delivered through a third-generation (3G) technology infrastructure, which enables cellphone users to make video calls and connect to the internet using a 3G card. <\/p>\n
Dobek Pater, a telecoms analyst at Africa Analysis, said Cell C had made no technological progress and had not developed its own 3G infrastructure. <\/p>\n
By the end of June 2007, Cell C had 3.3 million South African subscribers, compared with Vodacom's 24.3 million and MTN's 14 million subscribers. <\/p>\n
Saudi Arabian group Saudi Oger holds a majority stake in Cell C, which has about $800 million (R6.3 billion) in high-yield euro and dollar-denominated debt and shareholder loans of nearly R5 billion. <\/p>\n
Earlier this year Cell C chief financial officer Fabrizio Mambrini said the group expected to report a 30 percent rise in its core profit, benefitting from a turnaround plan. <\/p>\n
But Pater said Cell C had yet to prove its profitability. <\/p>\n
However, he expected the company to indicate a healthy subscriber base benefiting from its strategy to focus on the lower end of the market and good performance from its community service telephones. <\/p>\n
Cell C has partnered with musician and television personality Zola to sell branded SIM cards. It launched a R5 airtime voucher known as HalfTiger and Woza Weekend – a recharge for as little as R10 during the week and talk for free on weekends. <\/p>\n
Pater was concerned about the quality of these subscribers, who may have used less expensive weekend calls. <\/p>\n
Cell C is also in partnership with Virgin Mobile South Africa, which piggybacks on Cell C's network as an enhanced service provider. <\/p>\n
"A question in our mind is to what degree is co-operation and cannibalising taking place," Pater said.<\/p>\n