Cell C connects 500 000 customers

Saudi-backed Cell C, South Africa’s third and most recent mobile phone operator, has connected more than 500 000 customers within six months of starting business, chief executive Talat Laham said on Tuesday.

”By the end of this year our target is to be over one million subscribers. We are confident we will reach that,” Laham told a media briefing.

That figure would exceed Cell C’s original business plan target of 800 000 subscribers in year one, he said. The company expected the mobile phone market to reach 16 million subscribers by 2007.

”By then we expect we will have 20% market share (when) Cell C will have more than three million subscribers,” he said.

Cell C took on its well-established rivals MTN and Vodacom, which between them have about 10 million subscribers in a country of 43 million people.

It lured 100 000 pre-paid subscribers within 15 days of its launch with its simple, low-cost packages. ”Our branding and positioning has been spot on,” Laham said.

Cell C’s 500 000 current subscribers came from the traditional sources of churn — or subscribers switching networks — and new entrants to the cellular market. It was also picking up subscribers who were opting for three cellphones — one from each network operator.

With South Africa’s mobile market maturing, Cell C has attracted pre-paid customers, who are mostly marginal users but account for about 80% of the country’s customer base.

Laham said on Tuesday that 90% of its customers were pre-paid, and 10% were contract. More than 80% were active users. Average revenue per user (ARPU) was between R80 and R100 for pre-paid, and between R200 and R400 for post-paid.

Funding, he said, had remained well on track. Cell C had reduced the equity to debt ratio on its peak funding of $650-million from 50:50 to around 40:60.

Middle Eastern conglomerate Saudi Oger had paid in its equity of $250-million, and CellSAF’s $200-million portion of the company’s equity was expected to be in place by July 2002.

But a hitch to the company’s smooth roll-out was a delay in the completion of its first 1 500 base stations, which would be connected by March 2003, three months later than originally planned.

”Site acquisition was the main reason for the delays,” Laham said. Cell C has a roaming agreement with Vodacom, which gives it national coverage.

The road to winning South Africa’s third cellular licence was long and tortuous for the group, which is 60% owned by Saudi Oger. It was named preferred bidder in February 2000, but the licence was delayed by legal wrangles. – Reuters

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