- Cell C says its latest set of results showed that its turnaround strategy was having a "positive impact in stabilising the business", although some key performance industry were still down.
- CEO Douglas Stevenson says investors were looking forward to a proposed recapitalisation deal aimed at driving revenue growth and profitability.
- Net loss narrowed to R5.5 billion for the 2020 financial year, compared to compared to R7.6 billion in the first half of the year.
Cell C, which has battled a severe liquidity crunch, narrowed its net loss to R5.5 billion for the 2020 financial year, compared to R7.6 billion seen in the first half, with the company describing its performance as reflective of a "business in transit".
The telecommunications operator, which in 2020 defaulted on an interest payment on a $184 million loan, said its latest set of results showed that its turnaround strategy was having a "positive impact in stabilising the business", although some key performance industry were still down.
Its gross margin declined by 7% and cost optimisation resulted in overall direct expenses being 9% lower at R7 billion, from R7.7 billion in 2019, the annual financial statements released on Tuesday showed. A once-off expenditure of R5.7 billion was incurred due to recapitalisation and the costs associated with network restoration, which the company attributed to its net loss before tax of R5.5 billion.
"Our turnaround strategy has improved our financial performance as a mobile network operator and Cell C is operationally more efficient," said CEO Douglas Stevenson.
"Over the next three years we will fully transition to roam on partner networks - all with the aim of providing a quality network, innovative value offerings for our customers and ensuring a profitable and sustainable business."
'A business in transition'
Despite a challenging period, Cell C managed to lift total subscriber numbers to over 12.5 million, up from 11.7 million in the first half of the year.
In January 2020, Blue Label Telecoms, which is a 45% shareholders in Cell C, announced that the network provider had defaulted on interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank, China Development Bank Corporation, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China, which were due in January 2020.
"Our results reflect a business in transition," said CFO Zaf Mahomed.
"We are starting to see the impact of our changes which included a focus on more profitable subscribers and through the reduction in costs a shift to revenue generating activities. The foundations are now in place."
The financial challenges faced by Cell C has seen Blue Label write off its investment in the firm to zero, but support plans for the company's turnaround.
Stevenson said the investors were looking forward to "the proposed recapitalisation deal that will provide working capital aimed at driving revenue growth and profitability."
Total revenue was down by 8% to R13.8 billion, with a notable contribution from the prepaid customer base.