Cell C talks to MTN to secure more access to its network
Cell C is in advanced talks with MTN to gain more access to its network as SA’s third-biggest cellphone company strives to overcome mounting losses and add products such as financial services.
An extended roaming deal could be concluded within the next month, CEO Douglas Craigie Stevenson said in an interview.
Cell C already has access to MTN’s network in major cities such as Johannesburg and Cape Town.
“We are not a tower-owning company, our profits have to come from the services that we are able to offer customers,” said the CEO, who took charge on a permanent basis in August to replace the ousted Jose Dos Santos.
Cell C is struggling under R9bn of debt, while full-year losses have ballooned to R8bn from R656m a year earlier.
Its management team is in weekly calls with lenders to update them on plans and ensure the company pushes through a recapitalisation by the end of 2019.
A group of local banks has committed to provide temporary liquidity and extended the maturity of R1.2bn of debt that was due to be repaid in August, Cell C said in a presentation on Thursday.
Cell C has come close to collapse on previous occasions, and in 2016 was rescued by a funding plan led by Blue Label Telecoms.
“It’s always been a stressed investment and a company that has not been performance-managed,” Craigie Stevenson said. “Deals were done to fix a funding gap, and did not have thought-out longevity.”
Other investments, such in TV-content platform Black, have absorbed cash without generating appropriate returns, the company said.
New management is examining all costs and looking to get the most out of Cell C’s assets, CFO Zafar Mohamed said in the same interview. The company wants the bad news out of the way so as to enable the start of a growth plan, he said.
Blue Label shares have slumped 47% in 2019, valuing the group at R2.7bn.