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Cell C aims for big customer growth with MTN deal

May 30 2018 22:00
Duncan Alfreds
Cell C CEO Jose Dos Santos says that a new deal wi

Cell C CEO Jose Dos Santos says that a new deal will be good for Cell C customers. (Duncan Alfreds, Fin24)

Company Data

MTN GROUP LIMITED [JSE:MTN]

Last traded 80
Change 2
% Change 2
Cumulative volume 18299005
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

VODACOM GROUP LIMITED [JSE:VOD]

Last traded 126
Change 3
% Change 2
Cumulative volume 3419330
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Mobile operator Cell C is aiming to give its customers a network speed boost with an MTN [JSE:MTN] roaming agreement deal.

MTN is set to provide higher speed 3G and 4G services in areas where it is not economically viable for Cell C to build its own towers.

Cell C already has a roaming agreement with Vodacom [JSE:VOD] and it said the MTN deal will have no impact on its agreement with Vodacom.

"The roaming agreement with Vodacom will continue, with predominantly 2G traffic and limited 3G traffic running on its network. The MTN agreement caters for an extended 3G roaming footprint and access to 4G countrywide," Cell C CEO Jose Dos Santos told Fin24.

Cell C declined to reveal exactly how many MTN towers it will have access to.

"This information falls under the commercial agreement, the details of which remain confidential, but we can confirm that it is substantial," said Dos Santos.

Higher connection speeds

He confirmed that Cell C mobile virtual network operators would also be allowed to roam on the MTN network.

The deal is set to give Cell C customers who live in peri-urban areas a boost with higher connection speeds, and will ultimately boost the network's bottom line as more people consume higher amounts of data.

In Cell C's 2017 annual results, the company noted a massive net profit jump of 660% or R4.1bn.

The company also reported a 6% increase in subscribers to 16.3 million and data revenue of R5.2bn.

By electing to essentially rent tower space instead of building its own hardware, Cell C can potentially accelerate growth without having to expend capital, which came in at R1.2bn, or 8% of revenue in 2017.

According to OpenSignal's State of Mobile Networks: South Africa (August 2017) report, Vodacom and MTN dominate LTE, having crossed the 70% mark in terms of availability.

Long-term strategy

For Cell C, the MTN deal could help it secure its third position ahead of Telkom Mobile.

Dos Santos asserted that Cell C is aiming for urban customers as part of the company's long-term strategy in terms of its native tower network.

"Our primary focus for network rollout is in the major metro areas, where we have invested significantly. This strategy has not changed and we will continue to carry the bulk of traffic on our network."

mtn  |  cell c  |  mobile  |  internet
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