Cell C has moved to justify its decision to terminate its wholesale fixed-LTE offering, saying customers of the service made up just 0.5% of its base but were using 20% of its data network capacity.
TechCentral first reported on Wednesday that Cell C had issued a formal notice to its wholesale partners, including Internet Solutions, stating that it would terminate wholesale fixed-LTE services, potentially leaving thousands of retail customers in the lurch.
Internet Solutions had provided access to the LTE network to other Internet service providers, including Afrihost and Vox, which then offered wireless broadband services to retail consumers. In a letter to its channel partners, seen by TechCentral, Internet Solutions said 100GB and 200GB fixed-LTE packages would be terminated — with Sim cards deactivated and data forfeited — at midnight on 31 October. The same would happen on 20GB and 50GB packages on 31 December.
In the letter, Internet Solutions blamed Cell C’s “numerous business challenges, including its inability to sustainably support the demand that fixed LTE has placed on its network”.
Cell C, though, is clearly unhappy at Internet Solutions for making this statement.
“The provision of the service was no longer profitable for Cell C and, while another competitor may be willing to offer (this service) at a similar or lower price, Cell C does not believe it is sustainable,” the company said on Thursday.
The high data usage was having an impact of the quality of Cell C’s network and therefore for other Cell C customers, it added.
Product portfolio review
It said the decision to terminate wholesale fixed-LTE services — it will continue to sell such services directly to end users, though at a much higher price — is the result of a decision to review its full product portfolio. The wholesale fixed-LTE plans were introduced nearly two years ago and during that period the “competitive landscape has changed substantially”, it said.
“The decision to terminate this contract was not taken lightly and followed after several months of negotiations. The Internet service provider (Internet Solutions) was given the required three months’ notice. The decision has been made based on sound business principles and is in no way linked to Cell C’s debt,” it said. Cell C is in the process of a further recapitalisation of its distressed balance sheet, led by businessman Jonathan Beare’s Buffet Consortium. This is expected to be concluded in the next couple of months.
“Cell C is focused on being a profitable and viable mobile operator and is following a strategic road map aimed at simplifying its business model and right-sizing and optimising its business,” the company said in Thursday’s statement. Customers affected by the termination of the service should consider Cell C’s fibre offering or ADSL, it said. — © 2019 NewsCentral Media
