According to a report by City Press, Saudi Telecom has written off a R1.2 billion investment in Oger Telecom and attributed the impairment to its investment in Cell C.
Saudi Telecom indirectly owns 26% of Cell C through Oger Telecom, Cell C’s majority stakeholder.
Cell C CEO, Jose dos Santos, however, remains optimistic, “Their (Saudi Telecom) results are their results, but for us it doesn’t affect us at all,” the paper quoted Dos Santos as saying.
Cell C has been playing very aggressively in South Africa’s mobile space recently, slashing their prices and chasing new customers. This has been an expensive move for them but has paid off with the operator increasing its subscriber base to about 19 million (up from 13.6 million at the end of 2013).
Despite this growth, many analysts predict that Cell C may not survive. Their relatively small size when compared to Vodacom and MTN means they do not have the capacity to compete on the same level as the larger players.
This is particularly true around infrastructure roll-out. While Cell C reportedly invested R2.4 billion in their 4G network, it is only a fraction of the combined R15 billion that Vodacom and MTN invested in their networks over the last year.
Cell C however will definitely not go out without a fight. Cell C has recently launched a high court process against the call termination regulations that were enacted on 1 October 2014.
The new regulations give Cell C a smaller competitive advantage around call termination rate asymmetry than earlier stipulated regulations. Cell C has asked to see a copy of the record that lead to Icasa’s decision on the new regulations.
“The ‘record’ is all correspondence between Icasa and the network operators and other parties, Icasa’s meeting minutes, reports from Icasa’s experts, presentations, and other documentation that shows what process Icasa followed and what information it relied on in making its decision,” Dos Santos said.
At the same time Cell C is also fighting to stop a merger between Vodacom and Neotel. Cell C claims that the merger will give Vodacom too much dominance in the South African market, and kill off competition from smaller players.