Is Cell C in trouble?

Cell C released its year-end financial results earlier this week. Before the results were announced, there were rumours that Cell C has been facing some financial pressure, yet the results out this week appear to indicate that this is not the case.
 
The financial results
 
According to reports, Cell C’s overall revenue is up three percent year-on-year, while data revenue grew to R661 million for the period January to March 2015, up from R417 million in the same period last year.
 
Jose Dos Santos, Cell C CEO is reported to have said: “Both operationally and financially, we have seen some excellent growth in key areas, despite the lack of regulatory support. We have worked hard to grow both our customer base and drive efficiencies to bring us to the highlights of the 2014 results.”
 
Cell C is planning to build an R8 billion 4G/LTE network over the next three years in targeted areas across the country, including Gauteng, KwaZulu-Natal and the Western Cape.
 
Dos Santos said: “Gated communities and high-density residential areas where there is a great demand for high speed data will be one of our priorities.”
 
He added: “We have a comprehensive plan and strategic reasoning behind the specific tower rollout route we have chosen and are working tirelessly to ensure that every LTE site is linked to our fibre backbone to provide the highest level of quality and speed to our customers.”
 
According to reports, Cell C is expecting to build up to 1,000 of these LTE sites by the end of 2015.
 
Financial concerns
 
However, while these results indicate that Cell C is experiencing growth, in an article published earlier this month, it was reported that Cell C was considering retrenching some of its staff. In a statement to Fin24, Karin Fourie, head of communications at Cell C, said: “Cell C confirms that it has commenced the process of consultation in respect of possible retrenchments.”
 
She added: “At this time, and subject to consultation with the affected employees, this process could affect up to 47 employees whether through retrenchment or redeployment.
 
“The process followed is in line with the Labour Relations Act and the company is acting responsibly.”
 
There is also speculation that Oger Telecom, Cell C’s parent company, is looking to possibly sell the mobile network provider. According to reports, the company is currently in the process of reviewing Cell C.
 
According to Bloomberg, Dos Santos said: “The structure of the company is a shareholder issue and they are looking at their options from that point of view. They’re looking at where the business is going to be tomorrow and that makes some very exciting options for them to look at. Something eventually may happen.”
 
One issue that may impact Cell C financially going forward is load shedding. The company is reportedly going to spend R100 million on diesel this year.
 
Then of course there’s always the ongoing fight for business with giants Vodacom and MTN. In a bid to win over customers though, Cell C is now offering customers from its rivals a way out of their contracts by paying the penalty fees they are awarded by wanting to get out of their contracts early.
 
Cell C has pledged as much as R10 000 per new customer. Only time will tell if this latest gimmick will work. Many disgruntled customers have complained on social media about Vodacom and MTN’s recent price hikes for contract and pay as you go customers. However, some are unhappy by Cell C’s lack of coverage in certain areas. For more on Cell C’s offer to lure new customers, click here.
 
*Cell C had not responded to requests for comment at the time of publication, 15 May 2015