Following the conclusion of its years-long recapitalisation, mobile operator Cell C is confident it is now on firmer footing for growth moving forward.

The focus over the past three years has been on implementing a turnaround strategy, introducing a new business model and managing the transition of our network. This is the backdrop of our drive to lay a firm financial foundation while simultaneously implementing significant operational changes,” says Cell C CEO Douglas Craigie Stevenson.

The group on Thursday, jointly releasing its financial results for the year ended December 31, 2021, and the six months ended June 30, 2022, reported stable revenue during the first six months of 2022.

During the half year to June 30, revenue declined slightly to R6.51-billion from the R6.59-billion posted in the six months to June 30, 2021.

In the year ended December 31, 2021, Cell C recorded a 5% decline in revenue to R13.4-billion, compared with the R14.13-billion in 2020.

The prepaid segment, including prepaid broadband, accounted for 45% of the revenue, at R2.96-billion, during the first half of 2021, while revenue from its prepaid customer base contributed 47% to total revenue at R6.27-billion in the year ended December 2021.

The group subscriber base increased 4% year-on-year to 12.98-million, with an average revenue per user (Apru) of R81.09, by the end of December 2021, before contracting 1% to 12.79-million, with an Arpu of R80.11, by the end of June.

The group posted a net loss of R1.99-billion in the first half of 2022, compared with net profit of R148-million in the six months to June 30, 2021.

On a full-year basis, Cell C reduced its net loss from R5.38-billion in 2020 to R396-million in 2021.

Cell C posted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the first half of 2022 of R366-million, a contraction on the R1.28-billion in the first half of 2021.

In the year ended December 2021, Ebidta decreased to R2.58-billion, from R2.89-billion in 2020.

Recapitalisation costs continued to negatively impact Ebitda in both reporting periods.

Earnings before interest and tax (Ebit) for the first six months of 2022 was declared at a loss of R1.09-billion, compared with the profit of R667-million in the comparative six months in the prior year.

This was attributed to impairments during the first half of 2022 and as a result of audit adjustments and the business transition into the new operating model, and included forex losses of R155.2-million owing to the legacy foreign denominated debt and R694.7-million in one-off costs for recapitalisation costs, liquidity support and conversion of finance to operating leases.

During the year ended December 31, 2021, Ebit improved to R1.6-billion profit, owing to cost optimisation measures, compared with a loss of R3.5-billion in 2020 on the back of a R5.04-billion impairment of network assets. Also included in the 2020 loss before tax is interest payable of R1.5-billion and forex losses of R519-million, which will be significantly reduced post recapitalisation.

The finance and forex losses in 2021 were R282-million higher owing to the frozen repayments on debt and exchange rate losses resulting from a weaker rand.

“The interest charges and forex losses which have burdened Cell C over the past few years will be significantly lower, post recapitalisation, as the foreign debt will be reduced to nil and the one-off costs associated with the recapitalisation will be taken in full in the 2022 financial year,” says Cell C CFO Lerato Pule.

“We are almost there. Over the past 18 months, we have actively focused on optimising our network operating expenses, finance leases, capital expenditure (capex) spend and roaming costs. We will be reinvesting in our billing and network systems. Our capex-light infrastructure model will ensure a sustained liquidity position for the business.”

Cell C’s operating expenditure for the six months under review increased from R5.32-billion in the first half of 2021 to R6.15-billion, owing to higher recapitalisation costs and liquidity support, offset by lower network expenses and transition costs.

For the year ended December 31, 2021, operating expenditure decreased to R10.79-billion, from R11.24-billion.

“With a deleveraged balance sheet, a capex-light model, our solid spectrum, a loyal and profitable customer base and a resilient brand to underpin our transformation journey, Cell C is well placed for the future,” continues Craigie Stevenson, noting the progress made by the company.

Through its network strategy, Cell C has significantly increased its network footprint in the last 18 months.

As at the end of September 2022, Cell C had access to 9 131 sites, up from 3 000 sites, with over 96.5% long-term evolution-enabled.

Six provinces have been 100% migrated and all that remains is the Western Cape, KwaZulu-Natal and Gauteng which are at 88%, 57% and 33% respectively.

“We are systematically increasing our capacity and soon we will have 14 000 sites, enabling us to compete with the largest operators in the market,” Pule adds.

“In this next phase of growth, we have a number of new product offerings and partnerships in the pipeline, Capitec being the first one announced earlier this week. We are geared and ready to be an agile player in the evolving telco landscape.”