Cell C boss: We’re not in a capex race

2017-03-15 06:04 - Gareth van Zyl
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Cell C acting CEO Jose Dos Santos says that mobile operators should welcome MTR reductions. (Duncan Alfreds, News24)

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Johannesburg - South Africa’s third largest mobile network, Cell C, is not in a race to beef up its capital expenditure (capex), said the company’s CEO Jose Dos Santos.

Speaking at Cell C’s financial results briefing in Johannesburg on Tuesday, Dos Santos announced his company’s first ever full-year profit of R540m. The company, which first started operations in 2001, also reported 15.3 million users and revenue of R14.6bn.

The company further said it invested R3.4bn in its network and other fixed and intangible assets in 2016 and its total capital expenditure since 2013 has been over R11.6bn.

In comparison, South Africa’s biggest mobile network by subscribers, Vodacom, reported capital expenditure of R8.7bn for the year ended March 31 2016.

"There's been one or two analysts who have commented, you know, we don't spend enough capex as the other incumbents and we can't survive,” said Dos Santos.

"I mean this is not about a capex race. This is about having a network that offers the same coverage, the same quality as any other network,” he added.

Dos Santos further said his company has a “strong arrangement on roaming” with Vodacom in outer areas, and that Cell C chooses to "spend capex in the metro areas".

"What's important to know is on the voice side we carry 92% of the traffic on our own network, and on the data side we carry 96% of all data usage on our own network. So, we have a very clear strategy of how we position our products,” said Dos Santos.

"There's no need to spend R10bn a year,” he added.

Single, national network

Meanwhile, Dos Santos said his company supports South Africa’s white paper on ICT policy, which calls for a single public-private sector owned wireless open access network (WOAN).

The white paper, which was filed last year, further seeks to provide high demand spectrum to this WOAN network and shift away from networks having exclusive rights over this resource.

Subsequently, the white paper has faced criticism from the likes of opposition party the Democratic Alliance and even telecoms service providers like Telkom and Vodacom.

But Dos Santos cautiously supports it, as he explained that it could limit capex for mobile networks like Cell C.

“We support having this massive nationwide network that provides efficiencies and that will tap in and buy access to that network,” said Dos Santos.

“The world is changing and we have to find different ways of creating efficiencies, and there's nothing wrong with what the ministry is proposing in terms of having a massive national broadband network.

“You've just got to manage it carefully and you've got to make sure it's done properly - it will work,” he said.

Dos Santos said similar initiatives have been launched in countries such as Mexico and Poland.

“It's a way of bringing down the cost of data, the cost of minutes and creating efficiencies.

"So, I'm not going to be spending more capex. We're very clearly defined in terms of where we spend capex in metro areas and improving our own network in those urban areas,” Dos Santos said.

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