Cell C says its ready for its next phase of growth following the completion of its recapilitisation, led by its largest shareholder, JSE-listed Blue Label Telecoms.
CellC's recapitalisation, which was concluded earlier in the month, de-leveraged the operator’s balance sheet and improved its overall liquidity position.
Cell C CEO Douglas Craigie Stevenson said yesterday, while releasing the firm’s long-awaited interims, that the focus over the past three years had been on implementing a turnaround strategy, introducing a new business model, and managing the transition of the network.
“This is the backdrop of our drive to lay a firm financial foundation while simultaneously implementing significant operational changes," he said.
However, Stevenson said economic conditions such as the impact of Covid-19 and the resultant economic slowdown, exacerbated by the persistent loadshedding, impacted consumer and business confidence and, ultimately, consumer spending over the past 18 months.
"The above factors translated into a decline in the revenue through churn, lower gross additions, lower average spend per user, and higher discounts provided to attract the desired customer base. In addition, the delays of the complex recap process and the difficult adjustment period for Cell C, have to be considered when reviewing the company’s performance," he said.
For the first six months to June 2022 net profit before tax was R148 million from a loss of R7.6 billion the the previous comparable reporting period, up 102% “which is mainly driven by the impairment from the prior year”, Cell C said.
The mobile operator reported that despite these challenges, total revenue was stable at R6.51bn from R6.59bn the previous comparable reporting period.
The bulk of revenue continued to come from the prepaid segment, including prepaid broadband, which during the first half of 2022 contributed about 45% to total revenue at R2.96bn compared to last year's R3.03bn.
"For 2021, revenue from its prepaid customer base, including prepaid broadband, contributed 47% to total revenue at R6.27bn," it said.
Total Arpu (average revenue per user is a closely watched metric among investors) ncreased by 2.6% R80.11 compared to R78.07 a year earlier.
Chief financial officer Lerato Pule said post the recapitalisation Cell C was confident that there'll be less noise in the numbers and fewer adjustments.
"We've been going through a very kind of due diligence for our business. To ensure that we offer a sustainable business model. So there will not be any adjustments that are material unless they are any changes from accounting recognitions, etc," she said.
Looking forward, Stevenson said: "We need to manage the post recapitalisation phase in terms of its operations and as liquidity management. It's absolutely essential if no errors of the past are rehashed again. We will work as vigorously and as hard as possible to complete the network migration of the remaining provinces by the end of 2023 or earlier. “
He said Cell C would be starting to look at bringing more products into the market that would be innovative and more tuned towards listening to its customers.
"A continued investment in the key technology projects that are aligned to our strategy namely the core network and the base stations, support systems, and then a progression of our digital strategy transforming and growing the core while scaling up for new opportunities," he said.
BUSINESS REPORT