Cell C receives 5.7 billion rand equity boost - CNBC Africa

Cell C receives 5.7 billion rand equity boost

Technology

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South Africa’s third largest mobile network operator expects to use the fresh funding to improve network quality and boost its capital structure.

“It’s a step in the right direction and this type of capital expenditure and investment will be required on an on-going basis. I think it’s just a signal as to what has transpired over the last year with the new CEO Alan Knott-Craig and his drive to increase market share be it on a subscriber and revenue basis,” Ovum Enterprise senior analyst Richard Hurst.

“But I think the key here is that they’ve seen voice and data traffic increase and now they need to cater for this upsurge in subscriber figures.”

Traffic has doubled in Johannesburg for Cell C in the past 12 months, indicating a success Knott-Craig’s strategy and the recent cash injection could be a big nod from investors.

“I think the key has been the initiation of the price war, and we’ve seen reaction from the other network operators, Telkom Mobile, Vodacom to a certain degree, but that’s very compelling when we have a very cost-conscious society, and when we’re dealing with those people then they’ll use the network more,” said Hurst.

There is space in South Africa’s Electronic Communications Act for the regulator to develop regulations which would enable a competitive environment. This would mean where new entrants are struggling, the regulator can assist the entrants to reach fair competitive level with other telecoms operators.

South Africa’s information technology and telecommunications sector is however under the close eye of the Competition Commission, which recently fined telecommunications company Telkom 200 million rand over a three-year period over abusing their dominance in the broadband market.

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