SA`s third mobile operator, Cell C, has achieved solid revenue growth for the year ended 31 December 2008 and remains bullish about prospects for further growth.
The unlisted company reported a 14% surge in revenue, year-on-year, to R8.6 billion, and also reported earnings before interest, tax, depreciation and amortisation of R812 million.
Market share also increased during the period, says the operator, as the client acquisition and retention strategies bore fruit. As at 31 December 2008, the active subscriber base totalled 6.4 million subscribers, an increase of 34% from 2007.
Outgoing Cell C CEO Jeffrey Hedberg described the results as positive, given the tough economic environment, and the pressure on consumers` personal budgets and disposable income.
"Our strategy and tactical plans produced the results in 2008 and I believe the team has met the expectations of both our customers and shareholders," he says.
Hedberg adds that tighter management control had kept costs at adequate levels, while profit margins remained satisfactory.
Newly-appointed CEO Lars Reichelt says that, while the company has performed well in most areas of the business in 2008, there is still significant room for improvement. "The potential for growth remains strong and we will focus our efforts in 2009 to ensure Cell C offers simple, innovative, value-for-money products and improved customer service.
"Cell C will aggressively expand its network coverage and manage anticipated growth in usage. We will also further improve the operational and financial performance of the company."
Commenting on the results, Irnest Kaplan, MD of Kaplan Equity Analysts, says Cell C`s revenue is in line with market trends, with Vodacom showing a similar growth percentage in its financial year. "Margins are low, which is to be expected considering they are a late entrant," he says.
However, Kaplan points out that the biggest disappointment for the company is that it has not managed to translate its good subscriber growth of 34% into meaningful revenue.
"Average revenue per user must have gone down significantly. The subscriber growth is not reflected in the revenue growth of 14%, which means the average revenue per user must have dropped."
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