Telkom Has Unseated Cell C As SA’s Third-Largest Telco
Wireline and wireless telecommunications provider, Telkom, has become the third largest mobile operator in South Africa, having unseated Cell C, a customer-first telco.
Strong Mobile Traffic
Telkom, a partially state-owned business, has seen its mobile arm’s sustained growth trajectory into the first of 2020. Its mobile data contributed about 70 percent, becoming the main driver of growth.
Thanks to a surge in data traffic during South Africa’s strict coronavirus lockdown, the network provider now sits among the top 3, after 10 years of establishment.
In the year to March 31st, 2020, Telkom says it was the fastest-growing mobile business in the country. On the backs of a strong subscriber climb, it grew its mobile service revenue by 54.4 percent year on year to ZAR 12.6 Bn (over USD 747 Mn).
In March, Telkom reported an unusual surge in fixed and mobile network traffic for its services, mostly from people who were working from home as a result of the pandemic.
Then, enterprise customers reduced IT spend in the first half of 2020. In response to the economic effects of Covid-19, they also postponed some of their capital investment projects.
Earlier this month, Telkom struck a 3-year roaming deal with a multinational telecoms group. Norway’s Telenor will now help improve Telkom’s roaming retail offering to its end-users and be responsible for its full end-to-end wholesale roaming process.
Financial Headwinds
Cell C, on the other hand, has been through some debt-dominated topsy-turvy. Its annual report, published in August (2020) by Blue Label Telecom, the teleco’s largest shareholder, dipped by about a quarter between May 2019 and May 2020.
Cell C’s had 11.8 million subscribers as of 31st May 2020, that went down from 15.9 million a year ago, posting a decline of over 25 percent. The business had over 12 million customers at its financial year-end in March.
In 2019, Telkom’s plans to acquire Cell C fell through. The takeover bid was rejected as part of the response to Cell C expanding a roaming agreement with MTN, SA and Africa’s largest mobile operator.
Moreover, Cell C has faced several challenges and has resorted to a recapitalization program to improve its capital structure and find a way to turn its ZAR 9 Bn (more than USD 533 Mn) debt ship away from a steep edge.
Added to its plan of make 960 out of 2,500 workers redundant, Cell C expects to close around 128 stores across the country. That number of more than half of its retail footprint of about 240 stores in South Africa, and accounts for around 550 jobs.
The long-planned migration of Cell C’s network traffic to rival MTN is planned to continue, assuming MTN is satisfied that Cell C has stabilized its financial condition. Nevertheless, the approach may save Cell C, as would plans to lay off up to 38 percent of its workforce.
