South Africa: Cell C grows customers to 8,2m


Cell C grew its subscriber base by 12% to 8,2m at the end of 2010, SA’s third-largest cellular operator said. It was also on track to turn its first net profit “quite soon”, said chairman and acting CEO Simon Duffy.

Announcing Cell C’s financial results for the 12 months to 31 December 2010, Duffy said the company’s market share had grown to 15,4%, with churn decreasing by 14% to 53%. Average revenue per user — an important metric for mobile operators — climbed by 6% to R99.

Revenues grew 5% to R10,2bn, with service revenue (excluding handset sales) rising by 4% to R9,3bn. Earnings before interest, tax, depreciation and amortisation (Ebitda) remain unchanged at R1,4bn. Duffy said Ebitda was flat as a result of investment in infrastructure and rebranding. This investment would continue at similar levels in 2011, he said.

The company had R7,5bn in long-term debt on its balance sheet and another R500m in current liabilities, translating into leverage of six times Ebitda. “This is not untypical in this sector for companies that are still growing,” Duffy said. “It’s normal, if you like, fairly normal.”

Cell C last year secured a US$360m, eight-year debt facility to finance the roll-out of its network. Duffy said Standard & Poor’s had put Cell C on “positive outlooks, meaning it is thinking of upping our rating by a notch”.

In addition, the company repurchased $109m of its bonds, with 60% of bondholders electing not to sell their bonds. “This is a vote of confidence in the company, even though we offered them a 3% premium,” Duffy says.