Technology

Cell C reports R7.6bn interim net loss

Mobile operator Cell C has reported an interim net loss after tax for the six months to June 2020 of R7.6 billion, however stated this was primarily the results of once-off prices and changes and that normalised earnings truly grew by 64% to R1.8 billion.

The net loss after tax determine consists of impairments to the worth of R5 billion, Cell C stated on Tuesday. Net loss after tax in the identical interval in 2019 was R875 million.


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Revenue got here in at R6.9 billion in comparison with R7.4 billion a 12 months in the past. More than 89% of its income got here from service income, which was 6% decrease at R6.5 billion, whereas hybrid and fibre-to-the-home companies noticed a rise in gross sales of 16.7% and 11.1% respectively.

“In line with administration’s technique to rationalise its subscriber buyer base whereas retaining worthwhile prospects, the pay as you go subscriber base declined by 34.6% over a 12-month interval.

“This translated into only a 9.9% decrease in prepaid revenue, while gross margin grew by 11.5% and prepaid average revenue per user (Arpu) increased by 26.9%. The rationalisation process translated into an overall improvement in the customer base and a further 4.8% increase in prepaid Arpu since the end of June 2020,” Cell C stated in an announcement.

And, though income from the wholesale enterprise confirmed a 7% decline attributable to an “exit from wholesale agreements that diluted margins and congested the network”, the cellular digital community operator portion delivered an 18% enhance to R398 million. MVNO prospects embrace the likes of First National Bank and Virgin Mobile.

Operating margin
Chief monetary officer Zaf Mahomed stated that regardless of the difficult circumstances that impacted on the industrial spend, the corporate was nonetheless in a position to enhance its working margin.

“The first six months of 2020 was characterised by the continuing slowdown in the economy which weakened general customer spend. We have taken active steps to reduce our focus on pure revenue and subscriber growth and have shifted to more profitable, long-term growth in the prepaid and contract segments. We were also able to generate R418 million more cash from operations compared to the previous period.”

Reported earnings earlier than curiosity, tax, depreciation and amortisation was R1.2 billion, down from R1.4 billion. R5 billion value of property (community and right-of-use property) had been impaired as a result of new MTN South Africa community deal. Earnings earlier than curiosity and tax (Ebit) was a loss of R5.3 billion, in comparison with a revenue of R90 million within the first half of 2019. Excluding once-off recapitalisation and restructure prices, Ebit for the primary half of 2020 would have been at R162 million, an enchancment of 80%, Cell C stated.

“We stay centered on restructuring the stability sheet and optimising the enterprise for long-term competitiveness.

“We have a legacy debt challenge in our balance sheet rather than an income statement one, which will be addressed with the recapitalisation,” Mahomed stated.

CEO Douglas Craigie Stevenson stated Cell C’s focus will probably be on providing the correct options and companies and understanding the wants of its prospects.

Douglas Craigie Stevenson. Image: Supplied

“To stay competitive, Cell C had to take a different approach against our large rivals who are all heavily invested in capital-hungry infrastructure – three operators with large scale infrastructure simply doesn’t make financial sense. Our vision is to be the biggest aggregator of wholesale capacity and customer to the infrastructure providers. We will collaborate on infrastructure but compete on products and services.”  — © 2020 NewsCentral Media

This article was first printed on TechCentral here.

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