Last time I wrote about Cell C, I compared them to Telecel -Zim’s troubled mobile network operator. At the time I wrongly said they were fast becoming South Africa’s Telecel but it seems they might actually be worse off.
The SA MNO recently announced it’s financial results for the year ending May 2019 and things aren’t looking too good. The company lost R8.03 Billion which eclipses by far last years R656 million loss.
How you may be asking? Well, the CEO attributed R6.2 billion of that loss to the company conducting an impairment test
Cell C CEO Douglas Stevenson, however, believes the company will turn things around;
Our turnaround strategy is focused on ensuring operational efficiencies, restructuring our balance sheet, implementing a revised network strategy, and improving our overall liquidity. Cell C has a real opportunity to address its historical performance through a focus on operations that will restore shareholder value.
Douglas Stevenson
Impairment describes a permanent reduction in the value of a company’s asset. According to Investopedia ” If it’s found that the book value of the asset exceeds the cash flow or benefit of the asset, the difference between the two is written off and the value of the asset declines on the company’s balance sheet.” It seems this is exactly what happened to Cell C in this case.
Cell C also lost 2% of their subscriber base which is now just under 16 million. Average revenue per customer (ARPU) increased by 11% which is a good sign.
Keeping their hopes up
Mr Stevenson has said he expects the company to halt this slide and the turnaround strategy employed by the company was already reaping rewards;
- 18% increase in EBITDA over the last 3 months
- Year-on-year quarterly service revenue (June-Aug 2018 vs June-Aug 2019) grew by 2%
- Year-on-year quarterly gross margin down 9%
- Year-on-year quarterly EBITDA was 18% higher
Cell C is also expecting some changes to their streaming service Black to make a positive impact. The MNO also plans to remove non-profitable products and implementing a cost-efficiency program.
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