Cell C is seeking acquisitions that will help transform South Africa’s third biggest mobile phone company into a full-service telecommunications provider offering Internet and financial services as well as traditional calls and texts.
The wireless carrier is working on two fibre-to-the-home deals and is looking at other targets in markets such as insurance, CEO Jose dos Santos said in an interview. The expansion will kick-start a new phase of development for Cell C after the company reduced debt by more than 70% in a recapitalisation by Blue Label Telecoms last year, he said.
“We are in the process of doing the right acquisitions and partnerships to be able to provide everything from content, insurance and possibly even financial services that all goes along with well-priced data and broadband services,” said Dos Santos. “We want to start generating different revenue streams.”
Dos Santos’s plans may help Cell C come out of the shadow of Vodacom and MTN, South Africa’s two dominant mobile phone companies. Having been mired in ownership talks for two years, Cell C’s subscriber numbers sit at about 16m, compared to more than 40 million for Vodacom, the country’s market leader.
“Cell C’s biggest problem was that they did not move quickly enough to become net profit positive,” Dobek Pater, managing partner of Africa Analysis, said by phone. The recapitalisation may enable the company to add more revenue streams and potentially find a new strategic or equity partner, he said.
South Africans living in cities including Johannesburg, Cape Town and Durban have been able to subscribe to fibre broadband since new companies including Vumatel and Vox entered the market from 2015. That’s increased both capacity and Internet speeds and enabled telecoms companies to introduce new services such as video on demand. While fibre currently runs to about 500 000 South African homes, it is estimated that less than 30% of those households have signed up for fibre services, according to Dos Santos.
In November, Cell C launched Black, an online streaming platform that the company expects to challenge more established providers, including MultiChoice, Showmax and Netflix. The company plans to add more channels including some showing live sport, and will consider bidding for related contracts such as English Premier League matches, Dos Santos said.
“We could have done a partnership but we wanted our own content,” said the CEO. Black can be played on any device and customers can use airtime to purchase content, a first in South Africa, he said. Customers also have the option to do a daily, weekly or monthly subscription.
“Going into 2018, we want to be able to offer you unlimited voice, fibre to your home, content and then maybe lets add on that insurance on your household goods and car, and so on,” Dos Santos said. — Reported with assistance from John Bowker, Antony Sguazzin and Gordon Bell, (c) 2018 Bloomberg LP