Cell C Seeks Acquisitions to Add Services After Cutting Debt

(Bloomberg) -- Cell C Pty Ltd. is seeking acquisitions that will help transform South Africa’s third-biggest mobile-phone company into a full-service telecommunications provider offering internet and financial services as well as traditional calls and texts.

The wireless carrier is working on two fiber-to-the-home deals and is looking at other targets in markets such as insurance, Chief Executive Officer Jose dos Santos, 54, said in an interview at Bloomberg’s Johannesburg office. The expansion will kick-start a new phase of development for Cell C after the company reduced debt by more than 70 percent in a recapitalization by Blue Label Telecoms Ltd. last year, he said.

“We are in the process of doing the right acquisitions and partnerships to be able to provide everything from content, insurance, and possibly even financial services that all goes along with well-priced data and broadband services,” said Dos Santos, who wore a blazer and a candy-pink striped shirt. “We want to start generating different revenue streams.”

Dos Santos’s plans may help Johannesburg-based Cell C come out of the shadow of Vodacom Group Ltd. and MTN Group Ltd., South Africa’s two dominant mobile-phone companies. Having been mired in ownership talks for two years, Cell C’s subscriber numbers sit at about 16 million, compared with more than 40 million for Vodacom, the country’s market leader.

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“Cell C’s biggest problem was that they did not move quickly enough to become net profit positive,” Dobek Pater, managing partner of Africa Analysis, said by phone. The recapitalization may enable the company to add more revenue streams and potentially find a new strategic or equity partner, he said.

Blue Label bought a 45 percent stake in Cell C last year, a deal that saved thousands of jobs and increased the ownership of those discriminated against during apartheid, Cell C said in August.

South Africans living in cities including Johannesburg, Cape Town and Durban have been able to subscribe to fiber broadband since new companies including Vumatel Pty Ltd. and Vox Telecom Ltd. entered the market from 2015. That’s increased both capacity and internet speeds and enabled telecommunications companies to introduce new services such as video-on-demand. While fiber currently runs to about 500,000 South African homes, it is estimated that less than 30 percent of households have signed up for fiber services, according to Dos Santos.

In November, Cell C launched Black, an online streaming platform that the company expects to challenge more established providers, including Naspers Ltd. units Multichoice and Showmax and Netflix Inc. The company plans to add more channels including some showing live sport, and will consider bidding for related contracts such as English Premier League matches, Dos Santos said.

“We could have done a partnership but we wanted our own content,” said the CEO. Black can be played on any device and customers can use airtime to purchase content, a first in South Africa, he said. Customers also have the option to do a daily, weekly or monthly subscription.

“Going into 2018, we want to be able to offer you unlimited voice, fiber to your home, content and then maybe lets add on that insurance on your household goods and car, and so on,” Dos Santos said.

--With assistance from John Bowker Antony Sguazzin and Gordon Bell

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net.

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Antony Sguazzin at asguazzin@bloomberg.net, John Bowker, Vernon Wessels

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