MTN South Africa CEO Godfrey Motsa said on Thursday that it is not the company’s responsibility to save rival Cell C, but it’s also not in the interests of the telecommunications sector or the country to allow it to fail.
Speaking to an audience in Johannesburg, Motsa said if Cell C fails, it will not only affect the company’s thousands of employees but also tens of thousands of others who are dependent on it.
“It’s not MTN’s responsibility to save Cell C, but surely we can do something from our side,” he said. “But it has to be in the right economics.”
MTN and Cell C are at an advanced stage of negotiations to create a broader roaming agreement that will result in the latter relying much more extensively on the former’s infrastructure, allowing Cell C to reduce its capital expenditure. The expanded agreement is a precondition of a planned recapitalisation of Cell C being led by the Buffet Consortium, which is expected to be concluded by year-end.
Motsa said Cell C is a partner and a significant customer of MTN’s. But his company’s role goes beyond that, and it needs to be a good citizen of the country in its approach to the financially distressed Cell C. If the company were to fail, it would impact the sector more broadly, including suppliers and tax collection. “The impact on the country would be huge. If Cell C can be saved … it is good for Cell C, good for the sector and good for the country. We cannot return the country to growth by folding competitors.”
‘Giant MVNO’
Cell C, he said, has “spoken about being a giant MVNO”, or mobile virtual network operator that piggybacks on the network infrastructure of another network provider.
Last month, Cell C said it reported an R8-billion net loss for the 12-month period to 31 May 2019, much of this made up of one-off impairments. Despite this, management has talked up the company’s performance for the three months to end-August and said it’s on track to implement the complex turnaround plan. — © 2019 NewsCentral Media
- Now read: Inside the race to save Cell C