Cell C’s CEO Jose Dos Santos. Picture: FREDDY MAVUNDA
Cell C’s CEO Jose Dos Santos. Picture: FREDDY MAVUNDA

Cell C is planning a share sale in Johannesburg by the first quarter of 2020, as SA’s third-largest wireless company seeks funds for acquisitions.

The exact timing of an initial public offering (IPO) will depend on market conditions, CEO Jose dos Santos said in an interview on Tuesday. In the meantime, the carrier is looking at potential fibre-to-home deals to boost its internet and data-services businesses, he said.

"The fundamental thing is that we raise additional capital," the CEO said. "We have some nice acquisitions that we are looking at. We are moving into media and content, and we have a strong fibre-to-home play."

An IPO would represent a logical next step for Cell C, which emerged earlier in 2018 from a protracted debt-restructuring rescue plan that led to Blue Label Telecoms taking a 45% stake. Dos Santos has pledged to increase network spending and take the fight to larger rivals MTN and Vodacom, which dominate the telecommunications market.

Making losses

However, Cell C remains unprofitable, reporting a loss of R645m in the half year through June. "Cell C results today showed that they are still struggling and that another cash injection will be needed soon," Ron Klipin, an analyst at Cratos Capital, said by phone.

Dos Santos countered that Cell C was still in its first year following the recapitalisation and the company was ahead of targets laid out in its business plan. Among highlights was a 20% rise in data revenue — taking it above voice sales for the first time.

Johannesburg IPOs have been scarce of late, with wealth manager Quilter — formerly part of insurer Old Mutual — the most recent successful listing in June. Libstar, a maker of cheese and honey, sold stock at the bottom of its price range in May and has since lost almost a quarter of its value. In telecommunications, three African tower companies have abandoned plans for IPOs in 2018.

With faster and higher-quality internet services such as 5G coming on stream, smaller telecommunications companies may look to team up, Dos Santos said. Cell C rejected a proposal from Telkom, the number four mobile-phone company, in favour of the Blue Label deal earlier in 2018, but Dos Santos said such a deal might make sense in the future.