Early this morning media reported that Cell C had appointed Bowmans to investigate any parts of the business where the mobile operator suspects that there may be irregular business practices and hired PwC to do a full procurement audit and review of its processes. As a result Blue Label’s share price plunged by almost 13 percent to R3.40. Blue Label holds 45% stake in Cell C. Below is the letter on which the reports were based.
By Douglas Craigie Stevenson, Chief Executive Officer (Interim), Cell C
I was appointed in March 2019 as the interim CEO with the clear mandate from the Cell C Board to right-size and optimise the business. There was an acknowledgement that the company faces, and continues to face, financial and other challenges.
In an intensive 120-day period our new leadership team has a clear direction and have focused on ways to: Execute and implement a new business plan, aimed at simplifying the business model; Pursue a recapitalisation to optimise the capital structure; Extract greater value from our existing roaming agreement; and Optimise network revenue and usage.
The goal for Cell C is to become significantly better focused on operational performance, sound business ethics and accountability throughout the business.
Our efforts to improve the financial management of the business were enhanced in December 2018 with the board appointment of a new CFO, Zaf Mahomed, who has extensive business and finance experience. The financial results for Q2 2019 are showing some promising improvements to the bottom line, based on the measures taken since March 2019 to right-size the business. We have also appointed Deloitte as independent financial restructuring advisors to assist in optimising business processes. The company continues to face real challenges and we are in active discussions with our stakeholders with a view to achieving a secure financial position. In the interim, I can report the following:
We are also strengthening our board with independent non-executive directors in line with the King IV Code of Corporate Governance.
I want to emphasise that Cell C is strategically positioning itself and we are using our best efforts to be a strong participant in the industry, I firmly believe we are on the right track.