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MTN [JSE:MTN] South Africa has agreed to expand its network access to Cell C, the multinational mobile operator confirmed in a notice to shareholders on Monday.
"MTN Group confirms that MTN South Africa has signed a new long-form roaming and services agreement with Cell C, subject to certain conditions precedent," the shareholder notice read.
The new agreement builds onto the first agreement which was signed in May 2018 – in which Cell C was provided with 2G, 3G, and 4G roaming services on MTN's network in select areas of SA. The new agreement will allow Cell C to roam on MTN's network in all areas of the country, according to the notice.
MTN said the agreement is aligned to its strategy to develop its wholesale business, allowing both companies to "harness greater efficiencies", and supports a "more sustainable and competitive' industry.
MTN said that it continues to account for Cell C roaming revenue on a cash basis and that payments received since June have been on schedule. "Cell C continues to work on its recapitalisation and liquidity challenges which, if adequately resolved, would result in a change in MTN’s accounting treatment of Cell C roaming revenues back to an accrual accounting methodology," the notice read.
Cell C's CEO Craigie Stevenson told Bloomberg in September that the mobile operator was in the advanced stages in talks with MTN to expand its network access. Cell C already has access to MTN's network in major cities such as Johannesburg and Cape Town, Bloomberg reported.
'Transformative' agreement
In a statement issued by Cell C on Monday morning, Stevenson said the agreement is a "pivotal step" in the company's turnaround strategy. "One of the key pillars of this turnaround is to implement a revised network strategy that enables Cell C to manage its network capacity requirements in a more cost efficient and scalable manner," he said.
“This roaming agreement is transformative for Cell C. The company is no longer encumbered by the high costs of building a network footprint and we can focus our energy and efforts into developing innovative and disruptive service offerings that will be welcomed by data hungry consumers.
"This is a win-win all round as it has long term benefits for the economy, the industry and ultimately consumers," he added.
According to Cell C, the agreement will see its 4G network coverage extended to 95% of the population. "Cell C customers will have access to over 12 500 sites, of which 90% are LTE enabled," the statement read.
The expanded roaming agreement will be implemeented in early 2020, the transition is expected to take 36 months to complete, Cell C said.
Both mobile operators will maintain their spectrum and each party will use its own frequencies. "Cell C will still have all of its licences and control its core network, transmission, billing system and subscriber management," the statement read.
Cell C, CFO Zaf Mahomed added that the mobile operator's financial results were improving incrementally as the group continues to pursue recapitalisation to improve its liquidity. Fin24 previously reported that Cell C suffered a trading loss of R1.56bn for the year.
"The management focus on retaining profitable customers and expenditure savings has generated meaningful positive cash flow improvement on a month on month basis. It is a good sign that we are doing the right things and are on the road to recovery," Mahomed said.
Cell C's majority shareholder Blue Label Telecoms share price opened at R2.68 on Monday and was trading 5.88% stronger to the previous close at R2.70, by mid-morning.
*This article was updated at 09:20 on Monday November 18, 2019, to include comment from Cell C.
