Getting Cell C off life support

Cell C CEO Jorge Mendes believes that South Africa’s major mobile operators would prefer it if the company remains in a perpetual state of financial distress.

“The market needs us to succeed. We want to succeed, but not the way they want us to succeed,” Mendes told MyBroadband.

“They want us to succeed by lying in an ICU with a drip in our arm. I don’t want that.”

Mendes never outright says who “they” are, but his meaning is clear — Vodacom and MTN would much prefer the status quo to a disruptive Cell C.

Asked whether he was concerned that Cell C is dependent on Vodacom and MTN for wholesale mobile network services, Mendes said he wasn’t.

Cell C no longer operates its own mobile network, relying on Vodacom roaming for its contract subscribers, and MTN for a virtual radio access network to serve its prepaid and MVNO customers like Capitec Connect.

Aside from the ethical considerations if Vodacom and MTN tried to short-change Cell C on network quality, Mendes said they also had financial incentive to treat them well.

“I pay for the quality of service and data my customers use. I’m both of the networks’ biggest customer,” said Mendes.

“We’ve had great commercial conversations. They are fully aware of how we want to show up. We compete commercially. It’s nothing untoward.”

The Cell C boss has had a tumultuous year since he took over as chief executive of the beleaguered mobile network operator on 1 July 2023.

Cell C remains in financial distress, reporting a R337 million loss in the six months from June to November. It is also technically insolvent.

However, the company also said that its business stabilisation efforts started yielding results in the third quarter of 2023.

Cell C said Q3 2023 was the first quarter in the year where it saw year-on-year revenue growth.

The company said it is positioned to return to growth and greater competitiveness.

Extending the life support metaphor, Mendes told MyBroadband that he wanted to skip right past the rehabilitation phase and start running.

“We want to be on the front foot and compete and deliver real customer-centricity,” he said.

“I know customer-centricity sounds like a clichéd word, but you’ll see, as the network operators focus more on financial incentives, it typically goes against what customers really want.”

Mendes said he believes they are in a strategic position to think differently about how they can meet the expectations of customers who largely see their operator as a necessary evil.

However, he added that Cell C’s liquidity constraints required them to be strict about prioritising their focus.

“We had to make trade-offs, concentrate on significant impact areas, delay some initiatives, and be clinical in our spending decisions,” he said.

“As a result, our teams have become smart and innovative in maximising our limited resources.”

Mendes said a critical focus was fixing the basics in Cell C’s core business.

This included addressing operations and structures, understanding the financial position, and identifying key business drivers.

“This has enabled us to drive high performance rigorously and focus on returning to profitable growth, which remains high on our agenda,” he said.

“It was also important to stabilise leadership and hire the best professionals in the field with the technical competencies to deliver.”

Mendes said Cell C is a lean organisation, and building the right capacity and skills quickly while driving a turnaround agenda has been a big challenge.

“However, we have been addressing these capacity constraints effectively and continue to do so,” he said.

“Building belief, balancing conflicting priorities, and maintaining positive energy are as important as having the right skills and capacity,” Mendes continued.

“These factors impact outcomes, and we have had to shift from a survival mindset to one of growth and a can-do attitude.”

Mendes said that one of his biggest ambitions from the start was to build and foster a great, inclusive culture and team spirit.

“An amazing culture will help people navigate both good and bad days,” he said.