Cell C sees 'outstanding' revenue growth

Cellphone operator Cell C expects full-year core profit to rise by over 30% as a turn-around plan pays off, its chief financial officer said on Tuesday.

Newly appointed CFO Fabrizio Mambrini said the struggling firm expected growth in revenue to be “quite outstanding” after it last year launched a drive to boost subscriber numbers and pull itself out of the red.

“The company has made quite significant improvement in 2007 already. I would say this will be reflected in quite outstanding results,” he said in an interview.

“Growth in terms of revenue and EBITDA is quite outstanding.”

Unlisted Cell C, which releases its full-year results in March, has struggled to carve out a space in the South African market and has been weighed down by enormous debts.

Ratings agency Standard & Poor’s downgraded its long-term credit rating from B to B- last year, but Mambrini said Cell C was comfortable with the level of debt.

“The debt is an effect and not a cause. Debt is an effect of efficiency ...
Our target is to increase efficiency of the company,” he said.

Unique momentum

He also said Cell C could benefit from plans by Saudi’s Oger Telecom to buy a stake in telecoms group Telkom.

Oger owns a majority stake in Cell C, and Mambrini said his firm could benefit from Oger’s experience in Turkey, which has a number of similarities with the local telecoms market.

Cell C has yet to turn a profit, five years after launch, and has high-yield euro and dollar debt of about $800-million and shareholder loans of nearly R5-billion.

Mambrini said its recovery campaign, which includes a range of promotions and a plan to focus on the lower end of the market, had borne fruit.

Cell C had 3,3-million South African subscribers at the end of June, compared with the roughly 14-million of competitor MTN and Vodacom’s 24-million.

But Mambrini said he saw room for growth despite talk that the South African market, with up to 80% cellphone penetration, is saturated.

He said the 80% did not reflect movement between servers and that demand depended on the overall economy, which he said was fairly buoyant despite a slowdown.

“South Africa is the land of opportunity. Here we’re having rates of [economic] growth that in Europe you’re not having at all,” he said. - Reuters

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