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Less than a year after its JSE debut, Cell C is betting that being smaller, leaner and less asset-heavy than its rivals will give it an edge in a fiercely competitive telecommunications market, while regulatory reforms pose both risks and opportunities for the industry.The mobile operator, which completed its listing in November last year, has outlined an ambitious growth strategy centred on prepaid expansion, wholesale services, enterprise offerings and a rapidly growing mobile virtual network operator (MVNO) business. Speaking after the company’s first full-year results as a listed company, CEO Jorge Mendes said Cell C’s strategy remains unchanged despite its public listing. “We are not changing strategy. It’s a continuation to ensure sustainable growth, scalable returns and long-term value creation,” he said.Cell C reported revenue of R12.6bn and service revenue of R11.6bn for the year to May, while subscriber numbers increased to 8.9-million. The group expects revenue growth of between 5% and 10% in the coming financial year and is targeting adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of about R3bn in 2027.A key pillar of that growth strategy is the company’s wholesale division, particularly its MVNO ecosystem. Cell C has deliberately positioned itself as the “home of MVNOs”, partnering with retail, banking and consumer brands that use its connectivity platform to sell voice and data under their own brands.Wholesale revenue grew 20% year-on-year, while MVNO subscribers increased by 1.2-million. Mendes said the opportunity remained far from saturated. Total MVNO numbers stand at 5.7-million. “We’ve got a long way ahead of us still in terms of growth, in terms of subscribers, in terms of product, which translates into revenue, and in terms of new MVNO partners,” he said.The strategy differentiates Cell C from larger rivals that operate competing financial services, retail marketplaces or banking products. “We are very deliberate about not being a bank. That makes it very interesting for us in this space compared to competitors who want to be both a bank and a telco,” Mendes said.Cell C intends to remain “network agnostic”, integrating with different network providers and emerging technologies, including satellite connectivity, rather than investing heavily in its own infrastructure, he added.Cell C roams on Vodacom and MTN for its postpaid and prepaid customers, respectively. It does not have a huge capital investment compared to rivals since it does not own cell towers and other related physical infrastructure that requires billions in investments. It plans to spend about R700m during the 2027 financial year.Among the major projects in the coming year will be a new postpaid billing platform, further upgrades to digital customer channels, and the revamp of the remaining stores in Cell C’s 103-store footprint. The company has already refurbished 79 stores.Meanwhile, the postpaid segment is expected to become an increasingly important contributor after Cell C completed the reintegration of the Communication Equipment Company (CEC), which returns operational control of the business to the group.Mendes said management had spent much of the past six months cleaning up lower-value customers, improving credit vetting and expanding distribution. Cell C recently entered iStore outlets, gaining access to higher-value smartphone customers while increasing its telesales partners from five to 11. “The integration is complete. Postpaid revenue is consolidated. We see a clear road ahead,” he said.The company reduced the number of lower-value subscribers from about 90,000 to 15,000, replacing roughly 75,000 customers with higher-value users while keeping the overall base broadly stable. It has just over 8.8-million prepaid subscribers. The company also faces regulatory headwinds. It expects further pressure from declining mobile termination rates, which have already reduced revenue in its other segment. In addition, management is preparing for the implementation of the End User Subscriber Service Charter, expected from January 2027, which includes data rollover and other consumer protection measures. Cell C estimates the combined impact of these regulatory changes could exceed R400m.Mendes nevertheless argued that many regulatory reforms align with the company’s consumer-focused approach. “We are embracing regulation that is pro-consumer, that is pro-giving value to customers, and increasing competition,” he said.One area where Cell C is actively seeking reform is mobile number portability. Mendes described the current process as cumbersome and outdated, arguing that customers should be able to switch operators in minutes rather than waiting up to 24 hours.“We’d like the journey to be smooth and slick. If I want to move today from network A to network B and I’m on prepaid, it should be five minutes and it’s done,” he said. From November 2006 to end-July 2026, just over 14.7-million mobile numbers were ported. Average mobile ports per month is about 19,317, according to the Number Portability Company.Cell C also sees opportunities in small business services through its Cell C Business offering, launched earlier this year. Management is targeting SMEs with connectivity, cloud and managed services, supported by a network of reseller partners and dedicated account managers.Cell C generated R1.1bn in cash during the year to May. Management is targeting shareholder distributions equivalent to 30%-50% of free cash flow over the medium term.Business Times
