Cell C grows clients, but profit drops

Cell C has reported a 12% growth in the number of active subscribers on its network. It had 15.7 million active customers at end June up from 14 million in 2016.

However, the mobile operator has reported a net loss of R588 million for the first six months of the year, compared with a R3 million profit previously.

The net loss came despite an 11% increase in revenue to R7.7 billion. Service revenue climbed by 12% to R6.3 billion, while data revenue jumped 33% to R2.6 billion. Data traffic year-on-year rose by 84%.

Average revenue per user was R75, unchanged from the year-ago six-month period. Capital expenditure came in at R561 million, a sharp decline from the R1.7 billion spent in the fi rst half of 2016.

That number is likely to rise sharply following the recent recapitalisation of the business, which saw its interest-bearing debts reduced to R6.1 billion, from about R23 billion previously.

Cell C warned that it’s still facing legal and regulatory challenges from empowerment shareholder CellSAf to the recapitalisation, in terms of which Blue Label invested R5.5 billion for a 45% stake and Net1 UEPS Technologies invested R2 billion for a 15% stake.

CellSAf has lodged a complaint with communications regulator Icasa, arguing that Cell C didn’t follow the correct processes.

“Based on the many and various detailed legal opinions from eminent senior counsel obtained by the parties to the recapitalisation, Cell C has, in fact, followed the correct process,” it said.

“Cell C has now made extensive written and oral submissions to Icasa providing details of the structure and effect of the transaction. We are awaiting Icasa’s decision as to whether to accept Cell C’s position or to refer the matter to the complaints and compliance committee for adjudication.”

CellSAf has also lodged a complaint with the Competition Commission and filed papers in the high court. “The recapitalisation is not a merger within the meaning of the Competition Act. Despite this, CellSAf has laid a complaint with the commission that Cell C has not obtained approval… Cell C has now made an extensive submission to the commission to explain the factual and legal position as to why this is not a notifiable merger.”

This article was first published on TechCentral.

We are awaiting Icasa’s decision on whether to accept Cell C’s position or not. Cell C