Cell C gets US$350m cash boost

16 Jul 2013

Cell C‚ SA's third-largest mobile operator‚ said on Tuesday (16 July) that majority shareholder Oger Telecom had earmarked an equity investment of US$350m into the company.

In addition to the Oger Telecom investment‚ Nedbank and the Development Bank of Southern Africa had concluded a long-term financing package of R2.2bn to Cell C.

The funding will enable the company to accelerate its network infrastructure roll-out and provide more competitive products and services to subscribers.

The agreement of the two facilities comes after the Independent Communications Authority of SA's (Icasa's) announcement in June that it would conduct a market review that could lead to a reduction in mobile termination rates - fees that mobile operators pay to carry each other's calls.

Icasa also plans to review other programmes aimed at addressing the high cost to communicate in SA. The termination rate has dropped to 40c from R1.25 three years ago.

Cell C believes lower call termination rates will benefit the country.

Review of rates

High termination rates are seen as a barrier to smaller networks and new entrants being able to compete effectively on price because they have fewer customers and most of their calls are made to other networks‚ resulting in them paying more in termination fees to the bigger operators.

"Icasa's decision to conduct a market review of the remedies under the call termination regulations has bolstered our shareholders' confidence in the future of Cell C and the industry. The equity injection also strengthens our balance sheet. But Cell C needs aggressive and proactive regulatory support to continue its drive to reduce the cost to communicate in SA and remain sustainable in the process‚" said Cell C's chief executive Alan Knott-Craig.

Cell C said the equity investment of US$350m for 2013 was in addition to the US$200m equity invested in 2012. A further significant investment is scheduled for 2014.

"Under the leadership of Alan Knott-Craig‚ Cell C has gone from strength to strength. The company has a solid business strategy and we are confident that the regulator will make decisions that give smaller players a better chance of being sustainable competitors. It is on this basis that we as shareholders are fully committed to the company and the country‚" said Mohammed Hariri‚ chairman of both Cell C and Oger Telecom.

Source: Business Day via I-Net Bridge

Source: I-Net Bridge

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