Cell C lining up IPO to fuel ambition

Cell C lining up IPO to fuel ambition

South Africa’s Cell C is reportedly aiming to launch an IPO in 2020 as part of a strategy to generate capital for acquisitions.

Speaking to Bloomberg, the operator’s CEO Jose Dos Santos said that the timing is subject to change as the market conditions would have to be favourable, but until it goes ahead with the float Cell C will look to improve its data services and internet offering.

Last year, a programme of debt restructuring which saw Blue Label Telecoms take a 45% holding in Cell C allowed the South African firm to slash its burden by over 70%. The success of this initiative will enable Cell C to invest more in its network and financial services, allowing it to compete more effectively with market leaders MTN and Vodacom.

“The fundamental thing is that we raise additional capital,” notes Dos Santos. “We have some nice acquisitions that we are looking at. We are moving into media and content, and we have a strong fibre to the home play.”

Despite Dos Santos’ positive outlook, Cell C has thus far failed to turn a profit and indeed has made a loss of ZAR 645 million ($44.7 million) in H1 2018. While its subscriber numbers increased by 4%, its total of 16.3 million lags well behind Vodacom’s 43 million.

Cratos Capital analyst Ron Klipin cautioned: “Cell C results today showed that they are still struggling and that another cash injection will be needed soon.”

However, Dos Santos noted that Cell C is currently exceeding the targets it has set in its business goals. He noted that the operator’s data revenue had increased by 20% to outstrip voice revenue for the first time in the company’s history.