By Yasmine Jacobs for IOL
Cell C has started the migration of its 16 million subscribers to MTN’s cellphone tower infrastructure. This comes as the company prepares to switch off its own radio access network.
“From mid-December, our contract and broadband customers will be enabled to roam on a partner network. This change will be beneficial to our customers and ensure a connectivity experience that delivers both quality and value,” said Cell C in a statement released on Wednesday.
Cell C said its customers will be migrated in stages and it expects the transition to be completed by early February 2021.
“You will be alerted via SMS communication when your service will be enabled. This change will not result in any additional charges and your existing terms and conditions will remain in place,” Cell C added.
Customers have been advised to manually activate ’Data roaming’ in the phone settings in a bid to avoid disruptions to you data connectivity.
It’s worth noting that Apple device users’ data roaming will be activated automatically.
Customers still experiencing difficulties after this are encouraged to contact general customer service at 084 135.
According to MyBroadband, this infrastructure sharing strategy will help Cell C to cut down on network investments and forms part of a broader turnaround strategy to get the company out of deep financial woes.
By Barbara Friedman for EWN
Cell C is reportedly shutting down its network.
However, tech guru Brendon Peterson says it is a little more complicated than that.
Cell C’s statement did not say it was shutting down its network, he notes.
That seems to be where the confusion has come in.
“I know there have been quite a few bits and pieces of news out there saying Cell C is shutting down, but I was able to chat to them directly to get a better understanding of what is going on,” says Peterson.
In fact, Cell C will no longer be operating its own physical infrastructure such as the cellphone towers, and will instead be leasing the equipment from MTN.
So if you are a Cell C customer, you are still going to have service. It is still going to say Cell C. It is just not going to be routed through Cell C towers but rather through MTN towers. That’s it.
How will this benefit Cell C?
Cell C will be freed up from the costly maintenance and repair of towers, says Peterson, which will save money.
Customers will still be able to buy Cell C data and airtime as usual as well as update contracts.
None of that is going to change. And I double-checked with Cell C as that was the biggest concern everyone has got.
Cell C asked for a right of reply following this interview and spoke to Lester Kiewit on Wednesday.
By Dineo Faku for IOL
Blue Label yesterday notified its shareholders that troubled Cell C had defaulted on its loans.
The JSE-listed telecoms group, which holds 45% of Cell C, said the country’s third-largest mobile telecoms provider had failed to make payments of capital on its $184million (R3.16billion) note, which was due on Sunday, and interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank, the China Development Bank Corporation, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China, which were due in January and last month.
Blue Label said note holders were aware that Cell C was working on its liquidity crisis.
“Currently, none of the bilateral loan facilities has been accelerated, as note holders are aware, and support that Cell C is committed to resolving the situation by agreeing to restructure terms with its lenders while it also continues to work pro-actively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” said Blue Label.
Cell C said the loan defaults came as no surprise, because its informal debt was at a standstill until its recapitalisation programme was finalised.
“Cell C continues to work pro-actively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy,” the company said.
Cell C said its turnaround strategy was focused on ensuring operational efficiencies, restructuring its balance sheet, implementing a revised network strategy and improving overall liquidity.
“While a new recapitalisation is being negotiated, there is an informal debt standstill and debt payments have been suspended,” said the company.
It said that although Cell C’s lenders were entitled to call up the entire debt owed, they had not accelerated debt payments and had held off on taking action in order to facilitate a commercial solution.
“The non-payment is not a surprise to lenders that understand the Cell C turnaround strategy.”
The company said its S&P Global status on certain loan facilities and senior secured bonds remained unchanged at D (default).
Ofentse Dazela, director of pricing research at Africa Analysis, said the default showed that the company’s expanded roaming agreement with MTN, which was touted as some sort of panacea, had not yielded the intended results.
Dazela said the operator continued to navigate a challenging environment and questions about its sustainability were becoming more pronounced by the minute.
By Jan Cronje for Fin24
Mobile operator Cell C has defaulted on an interest payment on a $184m loan (about R2.7bn at current exchange rates) which was due in December 2019, according to a notice from its key shareholder Blue Label Telecoms Limited.
In a statement to shareholders on Tuesday, Blue Label said Cell C had also defaulted on interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank Limited, China Development Bank Corporation, Development Bank of Southern Africa Limited and Industrial and Commercial Bank of China Limited, which were due in January 2020.
Blue Label’s share price plunged by almost 12%.
“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” Blue Label said.
In a brief separate media statement, Cell C said that the suspension of payments was part of wider Cell C initiatives to “improve liquidity and to restructure the company’s balance sheet”.
“Cell C continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy,” it said.
Telkom’s recently released results show that fixed-line broadband subscribers – which include ADSL, VDSL, and fibre-to-the-home customers – declined from 974 181 in September 2018 to 781 255 in September 2019.
This means Telkom lost 192 926 fixed broadband subscribers over the last year, which equates to a 19.8% decline in its customer base.
However, the struggling telco has offered to buy Cell C and combine South Africa’s two smallest mobile network operators to better compete against larger rivals.
The bid includes a plan to reduce Cell C’s debt and renegotiate contracts with suppliers, the people said, asking not to be identified because negotiations are ongoing. Telkom wants to take over the management of Cell C’s business.
The approach comes as Cell C explores options with MTN and local investors known as the Buffett Consortium to recapitalise the company, which may include the sale of some of its assets. The two offers will be considered side-by-side as Cell C and its owners try to restructure R9-billion of debt.
This comes after Telkom recently announced that it will become the first national telecommunications operator in South Africa to switch off its legacy 2G network.
The company will terminate 2G services in March 2020, according to CEO Sipho Maseko.
The company has about 250 000 2G-only users left on its network, out of a total subscriber base of 11..5-million, as most have migrated from 2G to 3G.
According to a recent report by ITWeb, struggling telco Cell C is in possible buy-out talks with China Mobile.
It is rumoured negotiations are underway, and the company told ITWeb that it “is willing to talk to anyone wanting to stabilise the company”.
China Mobile has been pursuing expansion in Africa for some time. A year ago, the world’s largest carrier opened its South African office in Johannesburg.
However, Cell C CEO Douglas Craigie Stevenson reported told ITWeb that Cell C is not considering a merger.
Summary of the situation
- Last month Cell C reported a loss of R8-billion
- Top bosses have reiterated that the company is open to any potential buyers
- Blue Label Telecoms, who owns 45% of the telco, says they do not know whether their shareholding will be maintained or reduced
- Other Cell C shareholders include 3C Telecommunications with 30%; Net1, which owns 15%; while 10% is held by Cell C management and staff
- Reasons for Cell C’s debt include freezing jobs, declining revenue, debt management challenges and three downgrades by rating agency Standard & Poor
A recent article by MyBroadband explored how the popularity of VoIP services like WhatsApp has impacted voice income for South African major mobile networks: Vodacom, MTN, Telkom and Cell C.
- Vodacom has experienced a “slight decrease in the consumption of traditional voice minutes”, but said the advantages of traditional GSM calls still make it a good option for consumers.
- MTN told MyBroadband that it has “experienced a decrease in traditional calls and an increase in VoIP usage to match”.
- Cell C admitted they had noticed a decrease in the amount of traditional call minutes being used, but said that it had stabilised.
- Telkom told MyBroadband that it had “not seen a decrease in the average minutes of use per user for both on and off-network calling”.
However, according to We are Social, “WhatsApp is the biggest messaging app … in South Africa. We have 38-million unique mobile users, which grew by two million between 2017 and 2018. ”
The high costs of data in South Africa prevent many users from using WhatsApp’s full capabilities.
According to a recent MyBroadband article, Cell C is in deep financial trouble, and was “forced to delay its debt payments and hire consultants to probe its business practices”.
Cell C’s interim CEO, Douglas Craigie Stevenson, wrote an open letter detailing the challenges faced by the company. The letter included a turnaround strategy, aimed at “extracting greater value from its roaming agreement and optimising its network revenue and usage”. A recapitalisation programme is also on the cards.
Bowmans Attorneys have been hired to “investigate any parts of the business where we suspect that there may be irregular business practices”.
A sharp decline in Cell C shareholder Blue Label Telecoms’ share price followed this announcement.
According to MyBroadband, they have “received information from industry insiders saying Cell C is facing tremendous financial challenges which are big enough to bankrupt the company”, with some speculating the company may “close down and have its parts sold off”.
According to Stevenson’s open letter, the challenges faced are the following:
- Debt – this has gone up more than anticipated since the recapitalisation of 2017
- The cost of debt – Cell C is paying a substantial premium on the cost of its debt
- Liquidity problems – this is due to some of the events around the payment of large tranches on coupons
- Poor business performance – Cell C’s business performance has not been optimal
Industry insiders told MyBroadband that Cell C is in this position because of:
- High interconnect rates – the interconnect rate went from 20c to R1.25 before Cell C’s launch, which made it nearly impossible to compete
- Bad management and shareholders – the company was not run efficiently enough to become successful
- Declining voice revenues – as data products become more popular, high-margin voice traffic is declining
- High roaming charges – Cell C pays high roaming charges in areas where it does not have network coverage
Image credit: Tech Central
By Gugu Lourie for Tech Financials
South Africa’s troubled mobile operator, Cell C, has been downgraded on liquidity and refinancing risks concerns, Standard & Poor’s (S&P) Global Ratings has said in a statement.
Cell C faces considerable short-term liquidity and refinancing risks, with R8.8 billion of its R9 billion reported debt maturing within the next 18 months, and still-negative free cash flow.
The rating agency lowered Cell C’s issuer credit rating to CCC- from CCC+, placing it in “junk” territory.
The agency said Cell C would face a near-term liquidity crisis if it was unable to refinance upcoming maturities and secure new financing.
“This would increase the likelihood that Cell C might engage in a distressed exchange or restructuring discussions, which would likely result in us lowering the ratings further,” said S&P.
“We could raise the ratings if Cell C successfully refinances its upcoming debt maturities and if the refinancing enhances its capital structure and liquidity.”
Cell C’s liquidity position continues to weaken, while re-financing risk has intensified because of upcoming debt maturities.
In addition, it was announced in February that The Buffet Consortium, backed by financial institutions, would become a minority shareholder in an effort to bolster the company’s balance sheet and ensure its sustainability.
“Still, the conditions, timing, and outcome of such a transaction remain uncertain,” warned S&P.
Cell C’s reported cash on hand of about R500 million at Dec. 31, 2018, and a committed vendor financing facility of $71 million (R1 billion).
“Cell C’s liquidity position remains vulnerable to funding conditions, as well as the willingness of financial institutions to refinance the upcoming maturities and extend new capital expenditure (capex) financing lines,” said S&P.
The company’s upcoming debt maturities in 2019 and 2020 include:
- A R1.4 billion airtime backed facility due July 2019;
- About R3.8 billion of bank funding due January and July 2020;
- A $184 million (R2.6 billion) senior secured bond due August 2020; and
- A rolling R900 million handset financing facility.
“While the company generates sufficient EBITDA to cover its cash interest costs, the high effective interest rates on its
current borrowings and its unfunded capex profile lead us to assess its current capital structure as unsustainable,” said S&P.
“Furthermore, macro-economic conditions in South Africa remain weak, limiting Cell C’s ability to increase revenue and improve margins.”
By Loni Prinsloo, Bloomberg/Fin24
MTN will replace its cross-town rival Vodacom in a network-sharing deal with Cell C, South Africa’s third-largest mobile phone operator.
Cell C, which has roamed on Johannesburg-based Vodacom’s network since 2001, will switch to MTN from next month, Cell C chief executive officer Jose dos Santos said in an email.
The bulk of services will be transferred within two months and will allow the operator to offer 3G and 4G connectivity in areas where Cell C has decided not to build networks, he said.
For MTN, the deal will help fund “our ongoing network expansion,” MTN South Africa CEO Godfrey Motsa said in a statement.
Cell C will roam on MTN’s network in smaller cities and rural areas, where the company has additional capacity. Vodacom couldn’t immediately comment.
South Africa is MTN’s largest market after Nigeria and the company has invested almost R30bn during the past three years to expand its network and catch up with Vodacom’s coverage in the country.