Cell C says it's business as usual despite junk rating

2017-02-08 13:53 - Kyle Venktess, Fin24
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Cell C is pushing to grow market share in SA. (Duncan Alfreds, Fin24)

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Johannesburg - Mobile operator Cell C has assured customers that its network will remain active despite the company's recent credit downgrade to the lowest junk rating. 

Fin24 readers have expressed concern that Cell C’s downgraded to a ‘D’ credit rating by ratings firm Standard & Poor’s (S&P) may force the network to eventually shut down or increase the cost of services.

However, the mobile operator told Fin24 that the rating downgrade is not expected to impact customers or pricing. 

“This is a capital structure issue and will have no direct impact on customers or pricing. Cell C continues to operate as normal,” Cell C told Fin24. 

READ: Cell C downgraded to lowest junk status after missing payments

S&P’s decision to lower the mobile network’s credit status change from ‘CC’ to its lowest junk rating ‘D’ reflects the company's decision to miss interest payments in January 2017 on its €400m (R5.7bn) in senior secured bonds that are due in 2018. 

After the announcement of its credit rating downgrade had been made public on Tuesday, Cell C told Fin24 that it was currently engaging in a recapitalisation process, which was essential to delivering a sustainable capital structure for Cell C. 

“As part of this process, various capital and interest payments to lenders have been deferred. This has no direct impact on the underlying business of Cell C and the operational performance of the company remains strong,” Cell C spokespeople said. 

However, Fin24 readers have expressed their concerns over the downgrade, linking the rating downgrade to company’s recent price hikes. 

READ: Cell C blames rand, inflation for data price hikes

“I am worried as a customer by Cell C' management style. Every year they increase their tariffs by more than 20% whereas inflation is below 7% year by year. To make matters worse, their network in very poor,” one Fin24 reader said. 

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