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Embattled Cell C’s new boss says strategy being crafted will result in ‘different organisation’ in 18 to 24 months

15th September 2023

By: Natasha Odendaal

Creamer Media Senior Deputy Editor


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Two months into his new position, Cell C CEO Jorge Mendes is confident the embattled telecommunications company will turn its fortunes around to claim its place in South Africa’s telecommunications landscape, not only as a competitor but also as a complementary player.

Speaking to media during a roundtable in late August, Mendes outlined the troubles that Cell C has faced and said that there are green shoots as the company works towards growth and profitability.

After offloading its capital-heavy network and concluding its second recapitalisation, the telecommunications group will “do things differently”, with no plans to enter price or product wars – or go “toe to toe” with its two bigger rivals – but rather focus on what the customer wants while shifting the company’s culture.

Cell C entered the market in 2001 and has battled to gain traction against its two much larger rivals, Vodacom and MTN. In 2020, Telkom surpassed Cell C as South Africa’s third-largest mobile operator.

The company now intends to fix the “pain” it has inflicted on its shareholders.

One such shareholder is JSE-listed Blue Label, which has experienced a decline in its share price and financial results since it acquired a 45% stake in 2017, which increased to 49.53% following the conclusion of a second recapitalisation in 2022.

“We do need to ensure that we create some stakeholder value, which we have not done well in the past,” he says.

Mendes, who joined Cell C on July 1, says that this will not be a fast or easy process; however, he believes the company is now perfectly positioned to carve out opportunities and market share in the sector, based on a customer-centric strategy.

“We have a plan, we are busy crafting our strategy as we speak. In 18 to 24 months, the company will be a different organisation.

“It is a rolling start, we are not starting from standstill. There has been a bit of momentum and there are changes that we have made,” he told Engineering News & Mining Weekly in an interview after the briefing.

“The proof is in the pudding. The early signs are there, and we continue to drive that, but in our way, with our style and our flavour with collective leadership,” he says.

He says Cell C wants to complement other operators and compete in spaces from a network-light perspective.

“We have good value, we have good pricing and we have good products at the moment. We will show that we are going to return this business to profitability and get it going,” he assures.

Cell C, having shed its infrastructure burden, now has the space to focus on the customer and differentiate its offerings with the customer at the centre, unlock efficiencies and simplify a complex ecosystem, as, ultimately, it is about the customer experience and greater value.

Mendes previously highlighted at the Connected Africa conference how Cell C now has the best of both worlds, decreasing its capital expenditure as it concluded transitioning its network on to third-party networks and effectively evolving from a telecommunications operator to a digital-first technology company.

The group’s postpaid customers now roam on Vodacom, while its prepaid customers and mobile virtual network operators roam on MTN, collectively enabling nationwide network access for Cell C and widening its horizons.

One of Mendes’ biggest ambitions, in addition to zeroing in on customer centricity, is to have the best culture in the country as an organisation, which will enable the company to navigate any headwinds it may face.

“The employees are resilient, have belief and they want to make this work. Then you put that in with the right ingredients, [you have] the right people supporting the right strategies.”

Mendes comments that “a lot of amazing things” have already happened in the organisation, including great products that have not yet gone to market, owing to constraints.

“In fact, this organisation has delivered a number of really good products over the years and we intend to do some more,” he says, adding that Cell C has some products in its back pocket that are expected to launch quite soon.

Further, potential opportunities are there to partner with shareholders.

“We have major shareholders, Blue Label, being one of them. We have Gramercy, Nedbank and Lesaka, formerly Net 1. So we will always look at exploring what are those opportunities with the main shareholders.

“There is an ecosystem that could bring commercial benefits to consumers that perhaps we have not taken full advantage of.”

Meanwhile, Blue Label says it can bring value to Cell C as it mulls potential control of the company.

The major shareholder is looking to hike its shareholding to just over 50% to gain control of the operator, said Blue Label joint CEO Brett Levy during the company’s financial results presentation.

“Blue Label and Cell C are synonymous with one another, but the truth is, on the ground, it is not like that. The shareholding Blue Label has is like a no-man’s land. The company cannot remain in this position,” he says, noting that either Blue Label has to sell down its shares in Cell C or move into a position where it can get involved on a day-to-day basis.

“It is not our intention to sell down, it is our intention to get control.”

While no change will be seen from a Cell C perspective, Levy says that it will be beneficial and “life-changing” for Blue Label.

“Today, we obviously get the brunt of the performance of Cell C, and rightfully so, but we do not have any control of Cell C.”

“We have improved the liquidity of Cell C. When we recapped it in September, we understood exactly what we have to do and those plans are all under way.

“[Further,] of course, we have to consolidate this extremely good brand. So although we have had these hardships, we have had the ability to build a very powerful brand,” he continues, noting that the company understands where it is in the market and what needs to be done.

While Cell C still needs to undertake a lot of work to rebuild confidence and improve its network, liquidity and customer value proposition, Levy is confident the results will start showing in the next 12 to 18 months.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor




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