Despite its anaemic financial position, Cell C has renewed its sponsorship agreement with Sharks Rugby for another three years.
The embattled operator announced yesterday it had extended the long-standing partnership with the KwaZulu-Natal-based rugby club.
The renewed sponsorship deal may come as a surprise to some after analysts painted a bleak picture of Cell C’s future because the telco has been bleeding money for some time, which analysts said could place its existence in jeopardy.
Announcing the extended contract, Cell C CEO Douglas Craigie Stevenson said: “Our sponsorship over the last six years has proven exceptionally valuable as a brand engagement platform for our customers as we endeavour to connect with them through their passion whilst driving key brand and business objectives.
“Sponsorships help us to drive brand awareness, sales, engage customers and to drive brand love. The partnership has been rewarding, not to mention the amazing strides the Cell C Sharks have made to truly embrace the country’s diversity and what that brings to the game of rugby.”
This announcement by Craigie Stevenson came less than 24 hours after Cell C’s largest shareholder, Blue Label Telecoms, announced to shareholders that the telco had missed December’s interest payment on a $184 million (R2.7 billion) loan, as well as capital plus interest payments on loan facilities with different banks.
“Currently, none of the bilateral loan facilities have been accelerated as note-holders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” it said.
On Tuesday, analysts told ITWeb that Cell C’s debt is spiralling out of control, warning that options available to Cell C to salvage the situation are becoming minimal.
Peter Takaendesa, head of equities at Mergence Investment Managers, said Cell C has to raise more “capital if possible or sell the business before it’s too late. It is obvious to anyone closely following developments in the industry that Cell C’s assets will surely lose their attractiveness to potential buyers as soon as the government licenses additional spectrum to the industry.”
Ofentse Dazela, director for pricing research at Africa Analysis, commented: “If the current situation is not reversed quickly, then the inevitable shutdown of this operator will come sooner rather than later.”
Despite the growing concern with the company’s debt levels, Cell C yesterday said in a statement it is excited to once again be able to “leverage this valuable partnership through various sponsorship marketing initiatives which, in today’s cluttered marketing world, provides Cell C with a captive audience”.
It said it was consistently looking at ways to find these audiences and connect with customers through shared passions and values.
“The Cell C Sharks development programmes and their commitment to rugby development in the country as a whole is close to our hearts at Cell C,” said Craigie Stevenson.
Share