Cell C is investigating ‘irregular business practice’ – here’s why subscribers don’t need to panic (yet)
- Cell C is restructuring and investigating “irregular business practices”.
- It implemented austerity measures to improve the business’ performance.
- That may worry customers, but technology analyst Arthur Goldstuck said Cell C will likely never go under because it has a solid subscriber base.
- For more stories, go to Business Insider SA.
Cell C, the country’s third-largest cellular provider, has appointed law firm Bowmans to investigate “ irregular business practices” and is restructuring of its core business, interim CEO Douglas Craigie Stevenson said.
In an open letter released Wednesday night, Stevenson said Cell C is facing severe “financial and other challenges” and has implemented “significant austerity measures”.
Since his appointment in March, the Cell C’s executive team has adopted a new business plan aimed at simplifying the business model, he said.
This includes the appointment of auditing and consulting firm Deloitte as restructuring advisors to assist in optimising business processes.
“The goal for Cell C is to become significantly better focused on operational performance, sound business ethics and accountability throughout the business,” Stevenson wrote.
Without going into detail about the “irregular business practices”, Stevenson said Cell C has a “zero-tolerance policy towards illegal or unethical activity” and encouraged employees to use independent whistle-blowers services to report such behaviour.
Shares in Blue Label Telecoms, Cell C’s majority shareholder, dropped by more than 10% after the announcement.
Though talk of austerity measures may worry customers, technology analyst Arthur Goldstuck said Cell C users are unlikely to be affected by the changes in Cell C’s corporate structure.
Users should only start worrying when they struggle to connect to the network, which is highly unlikely, he said.
“I don’t think Cell C is going to close down anytime soon. The reality is that they have a major subscriber base which is an incredibly valuable asset that is certainly not going to be dumped,” Goldstuck told Business Insider South Africa.
“If things go seriously wrong someone like Telkom would likely buy it.”
Goldstuck said Cell C’s major problem is that it is unable to monetise its massive subscriber base, while it has to keep up a vast infrastructure network to compete with Vodacom and MTN.
He suggested that Cell C “vigorously attack” its data prices to entice new consumers, and simplify the complexity of its packages for consumers.
Telkom, which offers simple packages with a clear focus on cheaper data, is the example Cell C should follow, he said.
Also read: Telkom added 4.5 million users by piggybacking on the competition – and selling data for R50 less per gig than Vodacom
Telkom doubled its subscriber base the past year.
“I would say that Telkom is doing everything right that Cell C is not, and there is, therefore, a natural migration of consumers to Telkom from other networks,” Goldstuck said.
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