Cell C is set to receive a significant boost in the form of shareholder equity, to the tune of R1.5 billion, SA's third cellphone operator announced yesterday.
The local operator's majority shareholder, emerging market telecommunications operator Oger Telecom, is injecting $180 million as equity into the company - an investment Cell C CEO Alan Knott-Craig says “demonstrates the confidence [Cell C's] shareholders have in both SA and Cell C”.
Cell C is 75%-owned by Saudi Oger, through Dubai-based Oger Telecom and Lanun Securities, and 25%-owned by CellSAf, a black empowerment company.
Knott-Craig says the funding is being done in two tranches - one of which is still underway. He says the funding will strengthen Cell C's balance sheet and provide flexibility for the company to execute its portfolio and network plans. “The funding will be used [for] the funding of new products and enhancing the quality and coverage of the network.”
Shareholder shift
The latest financial supplement comes two years after Cell C slashed its debt ratio through a shareholder recapitalisation programme that effectively saw its debt at the time halved, from R13 billion to R6.6 billion.
The move was in part motivated by then CEO of Cell C Jeffrey Hedberg, who led the company from 2006 to 2009, and instituted under the leadership of the company's next CEO, in 2010, Lars Reichelt. Hedberg had previously noted that the only feasible way to save Cell C from drowning in debt was to get the shareholders to submit an equity infusion.
At the time, Reichelt said an equity injection would give Cell C “room to manoeuvre”.
Recently appointed as CEO, Knott-Craig's re-entry into the arena of telecommunications earlier this year set tongues wagging. Analysts projected big changes and an overall shake-up in the industry, as the former Vodacom boss would “go for the jugular”.
At the time of his appointment, in January, Knott-Craig said he aimed to grow the company's subscriber base by 60% ‑from nine million to 14 million - over the “next few years”. As at February, Cell C held 13.5% of SA's mobile market share.
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