Poor Cell C, it just can’t seem to catch a break. It’s felt like the writing has been on the wall for the cellular provider for some time now. The release of the company’s latest financial report for the last half of 2020 is even more illuminating. You see, while Cell C made a profit of R2.1 billion in the second half of last year, that pales in comparison to the whopping R7.5 billion it lost on the first half, despite some rather appealing data deals.
So overall that’s a net loss of R5.5 billion in 2020 for Cell C. Yikes.
It’s not just profits that are looking bleak as the financial report also indicates that Cell C experienced a decline in its prepaid subscriber base which dropped by 15% down to 9.2 million users. If we’re talking business, that’s a pretty huge drop off in users. Revenue was also down by 8%, with the company pulling in R13.8 billion compared to 2019 when the service provider earned R15.1 billion.
Didn’t Cell C that coming
Yet within the bad times there was improvement in certain fields. Average revenue per customer went up by 15%, but if that customer base is shrinking that doesn’t really strike us as an incredibly efficient way to keep a business afloat over an extended period of time.
Speaking to MyBroadband, Zaf Mahomed, Chief Financial Officer at Cell C said, “Our results reflect a business in transition. We are starting to see the impact of our changes which included a focus on more profitable subscribers and through the reduction in costs a shift to revenue generating activities. The foundations are now in place.”
Perhaps we’re being a little too negative about all of this. The loss experienced in the first half of 2020 was largely due expense stemming from network restoration and recapitalisation. These are considered to be once-off costs that shouldn’t necessarily impact the business model much more going forward.
Cell C CEO Douglas Craigie Stevenson said to MyBroadband, “Our turnaround strategy has improved our financial performance as a mobile network operator and Cell C is operationally more efficient. Over the next three years we will fully transition to roam on partner networks — all with the aim of providing a quality network, innovative value offerings for our customers and ensuring a profitable and sustainable business.”