Cell C, MTN extend roaming deal

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 18 Nov 2019
Cell C CEO Douglas Craigie Stevenson.
Cell C CEO Douglas Craigie Stevenson.

South African telcos Cell C and MTN today announced an extended roaming agreement that will help the country’s third-largest operator broaden its 4G network coverage nationally.

Cell C says the deal will extend 4G coverage to 95% of the population and its customers will now have access to over 12 500 sites, of which 90% are LTE-enabled.

Earlier this month, while celebrating its 25th anniversary, MTN said it had reached 95% 4G coverage across SA.

Cell C Douglas Craigie Stevenson says: “This is a pivotal step in Cell C’s turnaround strategy. One of the key pillars of this turnaround is to implement a revised network strategy that enables Cell C to manage its network capacity requirements in a more cost-efficient and scalable manner.

“This roaming agreement is transformative for Cell C. The company is no longer encumbered by the high costs of building a network footprint, and we can focus our energy and efforts into developing innovative and disruptive service offerings that will be welcomed by data-hungry consumers. This is a win-win all round as it has long-term benefits for the economy, the industry and ultimately consumers.”

Targeting efficiencies

According to Cell C, the agreement is in line with shifts in the global telecoms industry towards more cost-effective network strategies that drive down costs and deliver greater operational efficiencies that ultimately benefit consumers.

The extension announced today follows a 2018 roaming deal that provided 3G and 4G services in areas outside of the main metros to Cell C.

“The expanded roaming agreement extends this coverage and gives nationwide roaming to the benefit of Cell C subscribers,” says Cell C.

In a statement, MTN says it looks forward to transparent engagement with relevant stakeholders regarding this important industry milestone.

“As noted in our quarterly trading update for the period ended September 2019, MTN SA continues to account for Cell C roaming revenue on a cash basis, and payments received since June 2019 have remained on schedule.

“Cell C continues to work on its recapitalisation and liquidity challenges which, if adequately resolved, would result in a change in MTN’s accounting treatment of Cell C roaming revenues back to an accrual accounting methodology.”

The new roaming agreement will kick in from early 2020 and the transition is expected to take up to 36 months to complete, says a Cell C statement.

The troubled telco says the roaming agreement adheres to all applicable legal and regulatory requirements.

In terms of the agreement, Cell C and MTN will maintain their spectrum and each party will use its own frequencies. Cell C will still have all of its licences and control its core network, transmission, billing system and subscriber management.

Cell C says the MTN deal is part of its turnaround strategy, which is focused on ensuring operational efficiencies, restructuring its balance sheet, implementing a revised network strategy and improving overall liquidity.

According to Cell C, since reporting its financial results, it has seen incremental improvements to the bottom-line as the operational efficiencies start to have a positive impact on its financial performance.

Debt crisis

At the time of its financial results presentation, Cell C’s debt had ballooned from R7.44 billion to R8.24 billion, which the company said was driven by increased capital expenditure and working capital drawdown facilities.

It reported a loss of R8 billion for the year ended May from a previous year loss of R656 million.

Cell C CFO Zaf Mahomed says: “The management focus on retaining profitable customers and expenditure savings generated meaningful positive cash flow improvement on a month-on-month basis. It is a good sign that we are doing the right things and are on the road to recovery.”