SA's third mobile operator, Cell C, has a "strong strategic plan" in place and expects to double its revenue by 2010. The company also says it plans to become profitable in two years.
This statement comes amid new allegations the company is not performing well, staff members are resigning en masse, and major shareholders are reconsidering their investments.
In a media statement issued on Friday, Cell C rubbishes media claims the company is facing a financial meltdown.
Cell C has registered strong interest, taxes, depreciation and amortisation (EBITDA) growth over the past two years, resulting in an EBITDA breakeven in 2005, says Zeona Motshabi, Cell C's chief corporate officer.
She says the company expects to double its earnings before EBITDA by the end of 2007.
Cell C also plans to double its revenue by 2010, she says. "Let me be clear: management has a plan to reach profitability within the next two years."
Motshabi adds Cell C's performance should not be measured on its profitability, but on its EBITDA and cash flow. This is consistent with how third operators measure their performance at similar stages of development around the world, she explains.
Shareholding matters
Motshabi says, given the exciting times the company is in, there has been some interest in buying shares in the company. However, that is solely a shareholder issue, she says.
She adds Cell C shareholders have given the management team a mandate to turn the company around. Cell C's focus is solely on operational issues, while issues regarding shareholding are being dealt with by the shareholders directly, she says.
"The decision to disinvest or stay is, therefore, purely a business decision facing the shareholders - one that all shareholders face in the normal course of business."
BMI-TechKnowledge senior analyst Richard Hurst says even if Oger Telecoms disinvested from Cell C, it would merely be a changing of the guard. "The company would continue operations without missing a beat."
Cell C would have no difficulty finding a worthy suitor, he adds. Hurst adds that, looking to 2010, Cell C will have to start offering extremely competitive rates bundled with attractive service offerings such as a data and voice services.
As the environment becomes more competitive, operators will begin looking to each other for subscriber growth, he says.
Cell C says it has 2.9 million subscribers and 10% market share, and is targeting the LSM3-7 population group, which still has ample opportunities for growth.
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