Cell C ‘needs funds to keep going’ as new CEO warns against ‘illegal activity’
The head of South African mobile operator Cell C has told staff, customers and shareholders that the company is facing “financial and other challenges”.
Douglas Craigie Stevenson, who became interim CEO in March, wrote an open letter, published on its website, listing the problems that the company faces.
The letter says, among many other issues, that “Cell C has a zero-tolerance policy towards illegal or unethical activity and have encouraged employees to use the independent whistle-blowers service to anonymously report irregularities or illegal activities”.
Craigie Stevenson, who spent many years with Vodacom in roles across southern Africa before joining Cell C as COO in 2017, that Cell C needs restructuring. It has debts of the equivalent of $639 million.
Two years ago South African mobile commerce company Blue Label Telecoms took over effective control of Cell C in a financial restructuring. Its debt was reduced in the process from $1.7 billion to $445 million, at 2017 exchange rates, and Saudi Oger, which also owns 55% of Türk Telekom, lost much of its investment.
“Cell C is actively pursuing liquidity, recapitalisation and operational initiatives to ensure that we remain competitive,” Craigie Stevenson said in his letter.
“We are using our best efforts to be a strong participant in the industry and I firmly believe we are on the right track to achieve this. We have a new management team and a clear business plan.”
The team will have to unravel nearly 20 years of challenges – including a high interconnect rate with the two biggest operators in South Africa, MTN and Vodacom, as well as high roaming rates where it does not have its own network, and a decline in voice services.
His letter hints strongly at previous bad practices. Cell C has hired a law firm “to investigate any parts of the business where we suspect that there may be irregular business practices and have also hired PwC to do a full procurement audit and review of our processes.”
Craigie Stevenson says that Cell C has “re-emphasised that non-compliance with policies and procedures will not be tolerated” and has “taken meaningful steps to inculcate a transparent performance culture aligned with the business strategy”.
The company has already “implemented significant austerity measures”, he says, and it has “cut costs which do not contribute to revenue generating activities, including a review of all contracts to ensure alignment with business priorities and a hiring freeze”.