Cell C is on an expansion drive to deliver more services
Cell C is seeking acquisitions to help transform SA’s third-biggest cellphone company into a full-service telecommunications provider offering internet and financial services as well as traditional calls and texts.
The wireless carrier was working on two fibre-to-the-home deals and was looking at other targets in markets such as insurance, CEO Jose dos Santos said in an interview. The expansion would start a new phase of development for Cell C after it reduced debt by more than 70% in a recapitalisation by Blue Label Telecoms in 2017.
"We are in the process of doing the right acquisitions and partnerships to be able to provide everything from content, insurance and possibly even financial services that all goes along with well-priced data and broadband services," he said. "We want to start generating different revenue streams."
Cell C’s biggest problem was that they did not move quickly enough to become net profit positiveDobek Pater
Managing partner of Africa Analysis
Dos Santos’s plans may help Cell C come out of the shadow of Vodacom and MTN, SA’s two dominant cellphone companies.
Subscriber numbers at Cell C, which has been mired in ownership talks for two years, sit at about 16-million, compared with more than 40-million for market leader Vodacom.
"Cell C’s biggest problem was that they did not move quickly enough to become net profit positive," said Dobek Pater, managing partner of Africa Analysis. The recapitalisation could enable it to add more revenue streams and potentially find a new strategic or equity partner, Pater said.
Blue Label bought a 45% stake in Cell C in 2017 in a deal that saved thousands of jobs and increased black ownership.
Consumers living in Johannesburg, Cape Town and Durban have been able to subscribe to fibre broadband since new companies, including Vumatel and Vox Telecom, entered the market from 2015. That has increased capacity and internet speeds and enabled telecommunications companies to introduce new services such as video-on-demand.
While fibre runs to about 500,000 South African homes, it is estimated that less than 30% of those households have signed up for fibre services, according to Dos Santos.
In November, Cell C launched black, an online streaming platform that it expects to challenge established providers such as MultiChoice, Showmax and Netflix.
The company planned to add more channels, including some showing live sport, and would consider bidding for related contracts such as English Premier League matches, Dos Santos said.
"We could have done a partnership, but we wanted our own content," said the CEO.
Black could be played on any device and customers could use airtime to purchase content, a first in SA, he said. Customers had options of daily, weekly or monthly subscriptions.
"We want to be able to offer unlimited voice, fibre to your home, content and then maybe let’s add on that insurance on household goods, car and so on," Dos Santos said.