Cash boost sets Cell C’s growth strategy in motion

CELL C will use the R1,5bn that it had received from its parent company, Dubai-based Oger Telecom, to support its growth plans, it said last week.

The plans include funding of new products and enhancing the quality and coverage of the network. Cell C’s growth plans have also been revived by the arrival of CEO Alan Knott-craig, who joined the company last month, and has already sparked a price war against rivals.

Mr Knott-craig said last week that the “foreign investment into SA demonstrates the confidence our shareholders have in both SA and Cell C”.

World Wide Worx MD Arthur Goldstuck said the cash injection was “a combination of a vote of confidence by the shareholders in the viability of Cell C as an entity in which to invest, and recognition of the fact that it is not going to compete effectively without removing some of the restraints of its tight balance sheet.”

However, he said it was not so much about having cash to compete, “as about having the flexibility to execute tough decisions quickly”.

“If they are going to win the kind of market share Alan KnottCraig is targeting, then they need to be in a position to slash costs and thus operate on narrower margins. That’s not possible when debt is rising,” he said.

Two years ago Cell C’s shareholders slashed the company’s debt by half, by converting a R6,4bn loan into equity, in a move that will improve the cellphone network provider’s financial position and assist in raising funds to expand its network.

Mr Knott-craig is targeting market share of 25% within the next three to four years.

Although Cell C would not compete with Vodacom and MTN on infrastructure investment, the company was more nimble and could set the pace for innovation in marketing and package structures, said Mr Goldstuck.