Earlier, we reported that Cell C, one of South Africa’s top telecoms operators, revealed to the local market its plans to lay off a fraction of its workforce in an attempt to stay afloat in a harsh economic environment.
The operator’s activities in this regard, however, appear misunderstood. In an exchange with Bendada.com, the Buccleuch, Sandton-based telco confirms that it is not reducing its staff count, as that is not part of its current growth strategy.
No layoffs
“There are currently no discussions or plans for any such action. We are gearing up for growth and augmenting resources and capacity that will drive successful execution of its strategy”, Cell C emphasized in its final statement on the matter.
Instead, the business refers to its last restructuring cycle, between 2020 and 2021, when it laid off some semi-skilled, junior, and senior management workers to kick-start its turnaround plan.
According to an ITWeb report, the company revealed that to fit its new operating model and organizational restructure, it aligned some of its senior management roles in early 2020, in a process that could affect 30 positions. It’s not clear if that went on to happen.
The fourth-largest player on the South African telco turf, Cell C has a history of sustainability struggles. Besides finding it herculean to compete with rivals like MTN, Vodacom and (even) Telkom, the operator has accumulated up to $434 million in debt.
The business has also made substantial losses, with nearly $150 million forfeited between June 2021 and May 2022. In the same period, its revenues dipped from $696 million to $623 million. In the year ending December 2023, Cell C lost $207 million and 2.9 million subscribers. But the embattled telco stayed bullish.
Its latest financial performance results show a rebasing in the works. Despite a tough year exacerbated by the country’s current load-shedding crisis, the mobile operator was able to maintain a revenue position of $532 million in 2023, compared to $534 million in 2022.
“The Average Blended Revenue Per User (ARPU) for the consumer base has increased from R74 in 2022 to R80 by the end of September 2023 due to an increase in high-quality subscribers,” the report reads.
Application to increase TPC shareholding
Last December, SA’s telecoms watchdog, the Independent Communications Authority of South Africa (Icasa), revealed that Cell C has offered to increase the stake of its largest shareholder, The Prepaid Company (TPC), by 4.04% from 49.53% to 53.57%. TPC is a subsidiary of JSE-listed Blue Label Telecoms.
“The increase in shareholding by TPC is in the best interest of the business and all its stakeholders, as it is a strategic decision aimed at further enhancing long-term sustainability and our growth prospects,” Cell C explains.
Concerning ceding its operation license as part of the developments with TPC, the company will, “as a mobile network operator, continue to hold its ECS, ECNS, and spectrum licenses, providing mobile services to its customer base as part of its operating model”.
Cell C was required to apply to the country’s telecoms regulator because the additional 4.04% will tip TPC over 50% shareholding. Per Icasa’s Memorandum Regarding Control (2021), a party is deemed to control a licensee if it owns more than 50% of the shares in the licensee.
