Mobile operator Cell C has slashed its debt from R9 billion to R3 billion, as it forges ahead with its recapitalisation drive.
This emerged when the telco today published a trading update for its operational performance for the period from January to September 2023 (YTD Sept 23) and July to September 2023, as well as its audited numbers for FY22 and FY21.
In a statement, Cell C says its business stabilisation efforts are yielding improved results, positioning it to return to growth and enhanced competitiveness in the market.
This year has been a rebasing year for Cell C, it notes. Despite operating in a challenging landscape, exacerbated by load-shedding, Cell C’s business demonstrated resilience by maintaining the revenue position of R10.09 billion (YTD Sept 23) versus R10.14 billion in 2022, says the telco.
The objective of recapitalisation to reduce debt has been achieved, with interest-bearing debt moving from R9 billion to R3 billion, the company states.
Property, plant and equipment decreased by R1 billion because of the network transition and resultant decommissioning of network assets, it says.
“The lease concessions have also contributed to deleveraging the balance sheet. We have also issued an effective 11% of shares as part of the recapitalisation transaction which changed Cell C’s shareholding.
“Overall negative equity improved year-on-year but remained negative on 31 December 2022 and is expected to remain at these levels until the business turnaround is completed.”
CEO Jorge Mendes expresses his confidence in Cell C’s prospects: “With our newly-formed management team, building a great culture, a fully operational network and a robust strategy, Cell C is well-positioned to drive growth and profitability. We have implemented several strategic initiatives to drive revenue generation and reverse the struggling performance we experienced in the past.”
Cell C is confident the reduction of its asset base in line with the capex-light model will allow it to focus on driving profitable growth in the future.
“I am pleased that in the last quarter of 2023, we are seeing improved performance momentum. By leveraging our robust network infrastructure, we aim to capitalise on growth opportunities in the market and deliver sustainable performance in coming years.” Mendes comments.
The average blended revenue per user for the consumer base increased from R74 in 2022 to R80 by the end of September 2023 due to an increase in subscribers, the results show.
“Our direct expenses have increased by 7% year-on-year. The main drive being the finalisation of the network transition in June 2023.
“As at September 2022, the network transition progress was at 65%. The increase in the roaming costs has a direct impact on the gross margin, which also shows a reduction of 23%,” the operator says.
It adds that the focus to prioritise key performance indicators has begun to yield results, with Q3 2023 reflecting a growth trajectory in revenue and continued cost management.
This entailed driving the return to growth and profitability, leveraging the improved network quality and creating awareness with customers on the better connectivity, as well as launching propositions to induce trial, it explains.
“This was further buoyed with embedding a culture of execution excellence, building staff and stakeholder confidence.
“As a result, Q3 2023 saw overall revenue growth of 1.5% amounting to R50 million compared to Q3 2022. This increase has been driven by improved execution for prepaid, and continued growth in wholesale, postpaid and equipment sales. Q3 2023 has been the first quarter in 2023 where Cell C is showing revenue growth versus the prior year,” the firm says.
While Q3 2023 was a rebasing of performance, it notes the FY22 audited numbers reflect a business in transition, which includes the impact of the recapitalisation process that started on 30 September 2022.
Revenue declined by 9% in FY22 compared to FY21, despite a marginal increase in the customer base in 2022.
Earnings before interest, taxes, depreciation and amortisation reduced by 509%, the company says, adding that the net profit before tax ended at R5.2 billion in 2022.