South African mobile operator, Cell C, has announced that its shareholders have converted a R6,4bn loan into equity, to assist the company in raising funds to expand its network, this according to local publication Business Day.
The move will help the struggling operator shed its debt and move towards profitability. Lars Reichelt, CEO Cell C, described the situation as “a sign of faith in Cell C by the shareholders which shows their commitment in the market”.
He said the equity funds have decreased the company’s debt to Ebitda ratio. The operator has also committed to reducing costs, including handset subsidies, which helped so far in its current financial situation.
Cell C will spend R5,5bn in network expansion- that includes building a 3G mobile network and leasing capacity in fibre-optic cables from Dark Fibre Africa and Neotel, targeting the country’s high-end market.
Cell C has registered a customer base increase of 8% to around 6,9 million subscribers, despite the implementation of the Regulation of Interception of Communications and Provision of Communication- Related Information Act, which saw an overall drop in new subscriptions. From July last year, all mobile subscribers were required to submit proof of residence and a valid ID number when purchasing a SIM card.
Cell C is 60% owned by Saudi Oger, 25% by CellSaf investors and 15% by Saudi firm Lanun Securities.
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