Mobile network operator, Cell C’s latest financial results suggest the company is currently in R8.9-billion debt. Its poor financial situation is aggravated by a net loss of R1.273 billion for the year ended 31 December 2018.
The share price of Blue Label Telecoms, Cell C’s biggest shareholder which owns 45% stake in the mobile operator, plummeted from R17.04 when the mobile operator’s acquisition concluded to R3.58 on 20 March 2019. Blue label Telecoms’ ambitious plans to turn around the mobile operator’s financial fortunes failed to convince the market.
According to a report coming from MyBroadband, citing well-placed industry sources, Cell C and its shareholders are currently considering drastic measures to save the mobile operator. As per the report, the mobile operator is in discussions with MTN to potentially manage its network to cut its operational expenses.
Notably, Cell C already uses MTN’s network in areas where Cell C has chosen to purchase coverage rather than self-build. A network management services agreement with MTN can save Cell C a lot of money. But, getting past regulatory hurdles for the agreement will be quite challenging. The Competition Commission previously recommended that the Competition Tribunal prohibit a similar deal between MTN and Telkom.
Cell C is also hoping to get financially stable by signing a deal with the Buffet Consortium – which is backed by billionaire Jonathan Beare. In February this year, Blue Label Telecoms announced that Cell C has “concluded a binding term sheet” with The Buffet Consortium which will see it become a minority shareholder in the mobile operator.
In an interview with MyBroadband, Cell C said that a large part of the financial sustainability plan is to conclude the principles of the Buffet Consortium term sheet. The mobile operator said the deal is expected to bolster its balance sheet and ensure its sustainable growth for the future.
