The country’s third cellphone services provider, Cell C, said on Friday there was “absolutely no truth” to claims that the company was in a “financial meltdown”.
Zeona Motshabi, chief corporate officer of Cell C, said in a statement that the company has registered very strong earnings growth over the past two years, resulting in a breakeven in earnings before interest, tax, depreciation and amortisation (Ebitda) in 2005.
“On the basis of our new strategy and plan, we will be doubling our present Ebitda by 2010,” Motshabi said. “Indeed, Ebitda and cash flow are the appropriate metrics to measure our performance at this stage of our development. This is consistent with how third operators measure their performance at similar stages of development around the world.
“Hence, given the stage of our development, profitability at this point in time would not be an appropriate measure, particularly given the unique industry dynamics in South Africa. Let me be clear, however, management has a plan to reach profitability within the next two years,” Motshabi added.
She said Cell C has redefined its strategy with a focus on simplicity and efficiency. “Our strategy means simply focusing on things that contribute to the business and stop doing the things that don’t. This is especially important given that we are competing against two dominant operators with deep pockets and the fact that we are operating as the ‘David against the Goliaths’ within an imprecise regulatory environment.
“In the spirit of this focus, let us start with the customer: Our customer focus is on LSMs three to seven and on the basis of these requirements we will be providing affordable and accessible services.”
She continued: “There have been reports quoting different numbers. However, Cell C would like to clarify that as at end of March our total staff complement is over 2 600. Twenty-four positions have been affected in our realignment process, of which over 90% had the opportunity to consider alternative roles within Cell C.
“This number represents less than 1% of our entire staff complement. As with any turnaround and realignment process, certain roles will come under review, which is normal business practice.
“Furthermore, MNP [mobile number portability] is not an Achilles heel for Cell C, but rather an important initiative which promotes customer choice. Cell C has been the beneficiary of 40% of customers who have ported.
“Given some of the teething problems experienced by all operators, the uptake has been slow. Ultimately the decision by a customer to port will be a function of better education about the benefits of porting and easier porting processes.
“We are implementing this strategy, indeed we are making it happen, and over the last quarter, we are seeing very encouraging results. We are above target on our Ebitda and clearly not facing a financial meltdown as suggested in the press,” Motshabi asserted. — I-Net Bridge