Picture: ALAISTER RUSSELL
Picture: ALAISTER RUSSELL

Cell C, which has defaulted on almost R3bn of debt, said on Wednesday it has renewed its sponsorship agreement with Sharks Rugby.

The sponsorship agreement with the KwaZulu-Natal-based club will cover the next three years but Cell C would not reveal how much it is worth financially.

“Our sponsorship over the last six years has proven exceptionally valuable as a brand engagement platform for our customers as we endeavour to connect with them through their passion while driving key brand and business objectives,” said Cell C CEO Douglas Craigie Stevenson in a statement.

He said “sponsorships help us to drive brand awareness, sales, engage customers and to drive brand love. The partnership has been rewarding, not to mention the amazing strides the Cell C Sharks have made to truly embrace the country’s diversity and what that brings to the game of rugby.”

Cell C said the value of the contract “is of a commercial nature and therefore confidential”, adding that the sponsorship, which has proved valuable in the past, continues to be the company’s “primary property”.

Budget from marketing

Chris Willis, an analyst at All Weather Capital, said expenditure on such a deal is unlikely to be material for Cell C, which made R15.4bn in revenues in the last financial year.

The budget for that would come from marketing and would be part of the ordinary course of doing business, he said.

“The one thing that they cannot afford to do is to stop ordinary trading activities: marketing, promotions ... They need to keep revenue coming in if they want to keep the lights on.”

The announcement comes as news broke this week that SA’s third-biggest mobile operator failed to pay interest on its $184m (R2.7bn) bond, as well as loans and interest to lenders, including Nedbank and the Development Bank of Southern Africa.

Cell C, which is labouring under an R8.9bn debt pile, is in the middle of a turnaround strategy that includes bringing a group of investors led by property magnate Jonathan Beare to inject cash into the business in exchange for shares and scaling back on capital expenditure and cutting costs after clinching a roaming deal with larger rival MTN in November 2019.

Chartered accountant

Cell C also announced the appointment of two independent nonexecutive directors, Sindi Zilwa and Mark Nelson-Smith, who join the board with immediate effect.

A chartered accountant and published author, Zilwa is a well-known business person, having been named the youngest Business Woman of the Year in 1998. She has served on a number of boards, including Discovery, Redefine, Metrofile and Mercedes-Benz SA.

Nelson-Smith has served as chair of Invitel, a Hungarian cable and telecom company; nonexecutive director of Primacom, a German cable company; and worked for 14 years at UBS Investment Bank.

Zahir Williams, Cell C’s chief legal officer, has also joined the operator’s board as company secretary and adviser to the board on corporate governance.

Joe Mthimunye, Cell C’s board chair, said: “These appointments are an integral part of Cell C’s journey to improved financial stability, sound business ethics, good governance, better operational performance and sustainability.”

gavazam@businesslive.co.za