One year after being appointed Cell C CEO, Jorge Mendes has set his sights on refreshing the telco’s brand, in order to compete effectively.
Mendes revealed his plans in an exclusive interview with ITWeb TV, saying the brand refresh will start in the next few weeks.
In the wide-ranging interview, he discusses how Cell C has progressed with its business stabilisation efforts, the proposed call termination rates, plans for major shareholder Blue Label to take control of Cell C, as well as its mobile virtual network operator (MVNO) business.
Mendes also provides some advice for new communications minister Solly Malatsi on what he must prioritise in order for the local telecommunications industry to thrive.
One year into the job, Mendes comments: “It’s been an incredible journey filled with lots of fun, lots of obstacles, lots of challenges and wonderful opportunities. To be brutally honest, if I hold up a scorecard, I think we’ve done quite a lot over a fairly short period of time. I am really confident that we are well-positioned to take the business forward.
“Our main aims were to ensure we return to growth and profitability in a sustainable way, and we want to do that with customer-centricity – the customer is at the centre of all the decisions that we make. I’ve always been passionate about building an incredible culture and we have come a long way in doing so.”
When he was appointed in June last year, Mendes set out to overhaul the entire executive committee (exco) at Cell C and he says this has been completed.
Recent reports claimed Mendes was poaching staff from his former employer Vodacom to fill his exco at Cell C. While he agrees that some of the employees were hired from Vodacom, he says the telco hires from a diverse range of companies and industries.
‘Spirited disruptor’
With the exco team now finalised, his next move is to refresh the Cell C brand, while ensuring a sustainable and profitable business.
“We are in a position now where we can do a brand refresh, so watch this space for some new products and positioning. We are also revamping all our retail stores. We will start next month with the first one at Mall of Africa, with a completely new look and feel. Then we will do two more – one in KZN and one in the Western Cape. We will run them for a few months to ensure we sort out all the teething problems that we may have and then we will do hundreds of them in the same format in the coming months and into the next year,” he says.
However, he did not elaborate on how the brand refresh exercise will be done.
“I am going to leave that as a surprise, otherwise I will let the cat out of the bag, but we are not far now. We are probably couple of weeks or a month-and-a-half away from the brand refresh. We have done a lot of work over the last year to identify and engage with customers.
“What I can tell you is we are a spirited disruptor; that’s what we stand for. We want to make sure Cell C is a profitable and sustainable business. I think this is the last attempt at fixing Cell C and I am comfortable that we are very much on the right track.”
Over the years, Cell C has endured a liquidity crisis, but Mendes says efforts to stabilise the business are bearing fruit and it is also making progress in reducing its debt.
Last year, the mobile operator slashed its debt from R9 billion to R3 billion, as it forged ahead with its recapitalisation drive.
On business stabilisation efforts, he says the first thing it had to do was to restructure its roaming agreements with Vodacom and MTN.
Last year, Cell C successfully completed its network migration ahead of schedule. It is now operating with access to circa 14 000 towers countrywide, with more than 12 000 sites 4G/LTE-enabled.
In 2021, Cell C started migrating its contract and broadband customers to Vodacom, while it commenced building its own radio access network on MTN’s infrastructure and switched prepaid subscribers to MTN.
“The amount of money that we pay both partners is something that’s quite exceptional, to be honest, given the state of the economy and the tough trading conditions. From a wholesale revenue point of view, they [MTN and Vodacom] like it. It’s a capex-light model that we have elected to compete with. If we wanted to build our own network, we would have to use R35 billion to R40 billion and that’s a decision that we have taken to not do.
“We do not have the financial strength to do that to compete. Basically, we are swapping capex for opex – so you are paying hundreds of millions (monthly) in roaming fees but your customers get an incredible experience.
“Our financial position has changed fundamentally, but we are not in the clear yet. That will still take some time, as it was always part of the recap process, but our financial position has improved significantly from where it was a year ago.”
He says the purpose of the recapitalisation was a five-year journey and the firm is now two years into that journey. “The balance sheet is still a challenge but we don’t intend using our own balance sheet for now.
“We’ve taken out billions of costs permanently, and we are in the hundreds of millions increase in revenue, and when you look at the underlying business, the KPIs are trending well. So, we think we’ve got a great platform in terms of network quality.”
The MVNO business is going in the right direction, he adds. “We’ve started to grow the enterprise division – we had nothing there before.
“There is lots of work going on in our retail front and there are some beautiful changes coming there. So, I think all in all, I’m pretty pleased that we are going in the right direction.”
‘Bizarre situation’
Giving an update on the Blue Label takeover deal, he explains: “Blue Label is our major shareholder; they’ve got 49.3% and they have applied for control, so that process is well under way. There is a lot of requests for information…and I think it will still be a few months before that process is finally approved.
“We see this as a great opportunity because you have a majority shareholder who actually has control of the business, which I think was a bizarre situation because it wasn’t the case before. We want to take advantage of the full ecosystem of Blue Label because there is an incredible number of companies in the group that we are tapping into.”
He denies that the deal will see Cell C transferring control of its spectrum, network and service licences to Blue Label, as has been reported.
“We are not transferring anything. The spectrum is held by Cell C and the process that we are going through here is that Blue Label is moving from a majority shareholder to a controlling shareholder. When that process takes place, you have to apply to the regulator and the Competition Commission, and the documents you fill in is what creates the ambiguous feeling that we are transferring the spectrum, but we are not.
“Cell C will keep the spectrum; we are the licence-holder of that spectrum. We are not giving anything away; we are not selling the spectrum. Cell C remains in charge of that spectrum, but Cell C will be controlled by Blue Label when this process is approved,” says Mendes.
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