News Room

Cell C Faces a Rocky Future

Author: Sherryn de Vos
Date: 2017-02-27
If you are a Cell C customer, you might have noticed they have been in the news lately. So, what is going on with Cell C?
Cell C have found themselves in the news lately, and all for the wrong reasons. The first news came as the year started with the announcement that Cell C would be increasing all of their fees. From the beginning of February 2017, all contract, as well as pre-paid customers would be paying a percentage more for the service. The announcement created somewhat of a public outcry as the news came as the #datamustfall campaign was in full swing throughout the country.

Price Hike

Cell C defended its decision in raising prices pinning it on the ailing economy.
In a statement released earlier in the year, they stated: “Rising inflation, the rand, US Dollar exchange, and uncertainty in the industry over the allocation of spectrum, have all contributed to an increase in the cost to provide mobile services to consumers”.
Low GDP growth, and the inflation rate, all played a role in the rising costs of the services. The end user would be paying for the increase in support costs and operational expenditure. This is simply a matter of keeping the service running. From the beginning of February, customers found themselves spending that much more on calls, data, and SMS’s through the provider. SmartData Bundles have all increased. 25MB bundles rose by R2 to R10 and 500MB will now cost you R99 instead of R90. SmartData Contracts have risen, 500MB will now cost you R45 instead of R39. 10GB will now cost R349 instead of R299. Telkom Bid Cell C have recently been downgraded to junk status after missing payments. Ratings firm, Standard & Poor, have announced that the company will be downgraded from a CC rating to the lowest, D. The company missed interest payments in January 2017 on its €400m (R5.7 billion) in senior secured bonds, due in 2018. This naturally raised concern about the company’s ability to remain in active operation. Telkom has, in the meantime, been eyeing out the company from the sidelines. News broke earlier in the month that Telkom were considering a R1 billion for the embattled company. This, however, seems to have fallen through last week. Cell C confirmed that they were starting transactions with Blue Label Telecoms. Blue Label Telecoms is currently in the process of acquiring a 45% stake in Cell C for R5.5 billion.
Cell C Chairperson, Mohammed Hariri confirmed; “Cell C's board of directors would like to confirm that Cell C has already entered into legally binding agreements, in terms of which it has committed to a recapitalization transaction with, among other parties, Blue Label Telecoms Limited.” CLICK BELOW to read more about Telkom's FreeMe package.

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