Cell C added a million new customers in the financial year ended 31 December 2017, pushing its active subscriber numbers up to a total of 16.3 million.
The group says its ongoing turnaround strategy is beginning to show improved performance after its recapitalisation was completed last August.
"While our turnaround strategy was put in place in 2012, the recapitalisation of Cell C last year has really allowed us to create a strong foundation for the business. Our plans now are to build out this strategy and really accelerate our growth and investment going forward," says Cell C CEO Jose Dos Santos.
Dos Santos told ITWeb that the subscriber growth could have been even better but the group had a tough seven months before the recapitalisation where it was hampered by a lack of investment which stopped it from going out and being aggressive to acquire more subscribers.
"During the recapitalisation process it was more a question of maintaining the customers we had. But this year it's a different business, a different balance sheet and a more aggressive approach to acquiring customers out there. You will see some exciting stuff from next month," he says.
Despite another tough economic year, Cell C increased its total revenue by 7% from R14.6 billion in 2016 to R15.7 billion in 2017. Service revenue increased by 12% to R13.2 billion, largely driven by increased data volumes.
"Cell C's MVNO strategy and the growth in the wholesale division has also been a key contributor to revenue growth, with wholesale revenue increasing by 79% to R717 million," the group says.
Cell C reported a net profit of R4.1 billion for the year, on the back of a reported earnings before interest, taxes, depreciation and amortisation of R7.8 billion benefiting from a once-off gain of R4.1 billion arising from the recapitalisation transaction. On normalised terms the group showed a net loss of R26 million for the year, this when you exclude the once-off gain.
The telco says the aim of the recapitalisation was "to generate a healthy and sustainable balance sheet for the business and combined with the turnaround strategy, this has been accomplished".
The transaction reduced group debt from R17.7 billion to just over R6.8 billion.
Data boom
Data revenue increased by 29% and data usage increased by 90% year-on-year. Cell C's current active data customers increased by 1% to 12.6 million. The number of smartphones on the Cell C network increased by 21% year-on-year to 9.2 million devices.
"We are seeing more customers moving from feature devices to smart devices, partly due to the increased affordability of smartphones, especially company branded devices," says Dos Santos.
Data revenue now makes up 40% of Cell C's service revenue compared to 34% a year ago. The group says the cost of data decreased over the year with the effective price per MB dropping by more than 36% year-on-year.
The data growth has largely offset the continued decline in voice based on customers selecting alternative platforms for communication and the effective price per minute also declined by 4% year-on-year.
"This decline has become the new normal, and we expect it to accelerate over the coming years," adds Dos Santos.
Growth prospects
The network investment in 2017 was lower than in previous years, largely due to capital restraints before the recapitalisation was completed.
Capital expenditure (capex) was only R1.2 billion during the year compared to over R2 billion each year in the previous three years. However, Dos Santos says capex investment will be considerably higher in 2018, at over R3 billion, to ensure the telco keeps pace with infrastructure and capacity needs and technological innovations.
Cell C's 3G network now covers 96% of the South African population. Cell C's LTE-Advanced network, focused predominantly in the metropolitan areas, covers approximately 32% of the population.
"We will invest significantly in our network over the next few years with an aggressive rollout of more LTE-Advanced sites," he says.
Cell C's fibre division also saw strong growth and the company is in the process of making several acquisitions in this space.
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