Mergers, Acquisitions and Financial Results

Cellular operator Cell C has grown revenue 34% in the past year and is finally within sight of making a net profit from its 2,9-million subscribers.

For the first time in its five-year history, the network posted an annual profit for earnings before interest, tax, depreciation and amortisation (Ebitda). Its Ebitda surged into positive territory of R489m after a R46,6m loss last year.

Chief financial officer Muhieddine Ghalayini said the gross profit margin of 8% for the past year was "healthy" and a net profit could come soon, depending on how well the rand performed in servicing its foreign debts.

Capital expenditure has passed its peak, as its network rollout is almost complete. While Cell C will continue to upgrade its coverage, it will not need any additional funding after raising €625bn in high-yield bonds and negotiating a R500m credit facility with Nedbank.

For the year ending December last year, Cell C's revenue hit R5,5bn, up from R4,1bn. Cell C held its own against its far larger rivals, MTN and Vodacom, by retaining a 10% market share, with CEO Talaat Laham saying its figures would look better if the operators agreed on how to report their subscriber numbers to avoid exaggeration.

He said Cell C subscribers were up 32% from the 2,1-million reported a year ago.

Laham says its joint venture with Virgin Mobile, which will offer a new range of packages aimed at high-spending users who are now locked in with Vodacom and MTN, should aid sales growth.

Virgin Mobile's launch will come shortly before the introduction of number portability in September, which will allow users to switch networks but keep their existing number.

Cell C's Arpu has risen from R142 to R147 a month as it won more high-spending users. That puts it on a par with Vodacom's R147, with both lagging behind MTN SA's monthly average of R164.

Business Day