Cell C has reported improved performance, due to strategic measures put in place to enact its turnaround strategy, with strong results for the year ended 31 December 2017.
“While our turnaround strategy was put in place in 2012, the recapitalisation of Cell C last year has really allowed us to create a strong foundation for the business. Our plans now are to build out this strategy and really accelerate our growth and investment going forward,” says Cell C CEO Jose Dos Santos.
Despite another tough economic year, Cell C increased its total revenue to R15,7-billion from R14,6-billion; an increase of 7%. Cell C’s continued focus on exceptional value and disruptive product offerings, particularly in the prepaid market, has partly led the growth in revenue over the year. Cell C’s MVNO strategy and the growth in the wholesale division has also been a key contributor to revenue growth, with wholesale revenue increasing by 79% to R717-million.
Service revenue increased by 12% to R13,2-billion, largely driven by increased data volumes. “Data usage per customer continues to grow off the back of the continued decreased cost per MB of data on the Cell C Network, which dropped by more than 36% year-on-year. We are also seeing more customers moving from feature devices to smart devices, partly due to the increased affordability of smartphones, especially company branded devices,” says Dos Santos.
Data revenue increased by 29% and data usage increased by 90% year-on-year. The number of smartphones on the Cell C network increased by 21% year-on-year to 9,2-million devices. Cell C’s current active data customers increased to 12,66-million.
The data growth has largely offset the continued decline in voice based on customers selecting alternative platforms for communication and the effective price per minute also declined by 4% year-on-year. “This decline has become the new normal, and we expect it to accelerate over the coming years,” says Dos Santos.
Cell C reported a net profit of R4,1-billion for the year, on the back of a reported EBITDA of R7,8-billion benefiting from a once-off gain of R4,1-billion arising from the recapitalisation transaction.
The aim of the transaction was to generate a healthy and sustainable balance sheet for the business and combined with the turnaround strategy, this has been accomplished. The positive net equity of the business of R3,8-billion and the reduced debt from R17,7-billion to just over R6,8-billion are both indicative of the work put into generating a vigorous business.
“We have also strengthened our top management structure and the team we now have in place to take Cell C into the next few years is exceptionally skilled,” says Dos Santos.
The network investment in 2017 was lower than in previous years, largely due to the slowed investment during the transaction period. “This investment will increase going forward to ensure we keep pace with infrastructure and capacity needs and technological innovations,” says Dos Santos. Cell C now offers 3G services to 96% of the South African population. Cell C’s LTE-Advanced network, focussed predominantly in the metropolitan areas, covers approximately 32% of the population. “We will invest significantly in our network over the next few years with an aggressive rollout of more LTE-Advanced sites.”
Operationally, the company continues to provide value based products and services, and disruption of the market. “Our biggest disruptor for the year was definitely the launch of the company’s entertainment platform, black. The service launched in the latter part of the fourth quarter and we will report numbers later in the year,” says Dos Santos.
Cell C’s fibre division has also shown excellent growth and the company is in the process of making several acquisitions in this space. During the second quarter of 2018, Cell C plans to release a full triple play offering that will include unlimited and uncapped fibre, mobile voice and data and entertainment services through our black platform.