When Virgin Mobile entered the local market, there were high hopes that Cell C, the country's smallest network operator, which had been operating at a loss since its launch 2001, would be out of the red in a flash. But two years on, it's still not clear what Virgin Mobile South Africa is contributing to Cell C. <\/p>\n
Virgin Mobile SA is targeting high-end customers, the market Cell C was unable to attract. but within a few months, Virgin Mobile had scaled back its targets, indicating that it had overestimated the market. <\/p>\n
Cell C chief executive Jeffrey Hedberg said at the results announcement on Tuesday that Virgin Mobile had been showing improved performance since the latter part of last year and had registered good results since the beginning of this year.<\/p>\n
However, when asked if Cell C was still happy with the partnership, Hedberg – who was this year appointed as chairman of Virgin Mobile's board – was coy, first giving the bland "too early to comment" reply, then saying Cell C was still benefiting from its wholesale agreement with Virgin Mobile.<\/p>\n
Virgin Mobile chief executive Peter Boyd says the firm is meeting its targets: it has so far notched up 400 000 customers. <\/p>\n
Virgin's other joint venture, Virgin Money, is reportedly not doing well – possibly another case of the UK group miscalculating the South African market. Cell C and Virgin rotate chairmanship each year. It is Cell C's turn this year, so it can be expected to push for strategic decisions in its favour. <\/p>\n
It is just starting to reverse its misfortunes, and is not rushing yet to tap into markets such as high-speed internet. <\/p>\n
Shareholders have a lot to thank Hedberg for. Within no time since joining Cell C in 2006, he identified the group's problems: poor confidence and lack of focus. It has taken him time to right the company.<\/p>\n
Cell C has now carved out its niche at the bottom end of the cellphone market, providing simple, affordable packages. The change in strategy has turned an operating loss into operating profit of R321 million, with cash flow at R841 million.<\/p>\n