Cell C has reported a net profit before tax figure of R5.2 billion for the 2022 financial year, while its revenue for the year to date in 2023 has slid by approximately R50 million.
The company released a trading update for its operational performance for the year-to-date on Monday, 27 November 2023.
Cell C’s trading update also included a review of its financial performance for the 2022 financial year. The company’s net profit before tax ended at R5.2 billion in December 2022.
“The main drivers of the movement have been the recapitalisation and the continuation of the network transition,” it said.
“The large once-offs in 2022 in other gains relates to the recapitalisation impact,” stated Cell C.
“A benefit of R8.9 billion was realised due mostly to the debt concessions related to recapitalisation. The other gains would not repeat in 2023 as these relate to the recapitalisation transaction.”
Earnings before interest, taxes, depreciation, and amortisation reduced by 509% between 2021 and 2022.
Cell C said this was due to revenue reduction, the continued evolution of direct expenditure in line with the network transition plan and lower operating costs.
The company’s revenue declined by approximately R50 million between January and September 2023 despite a significant increase in average blended revenue per user (ARPU) from R74 in September 2022 to R80 in September 2023.
Cell C explained that the increase in ARPU had arisen from its accumulation of more high-quality subscribers.
The mobile virtual network operator likely would have seen its revenue position slide more had it not performed relatively well in the third quarter of 2023 — from July to September.
“Q3’23 saw overall revenue growth of 1.5%, amounting to R50 million compared to Q3 ’22,” said Cell C.
“Q3’23 has been the first quarter in 2023 where Cell C is showing revenue growth versus [the] prior year.”
It noted that the increase during the quarter was driven by improved execution in the prepaid space and ongoing growth in wholesale, postpaid, and equipment sales.
Cell C’s direct expenses between January and September 2023 increased by 7% compared to the same period the year prior.
It said this was primarily driven by the finalisation of its network transition in June 2023.
“The increase in the roaming costs has a direct impact on the gross margin, which also shows a reduction of 23%. This will continue to be a difference between Cell C and the balance of the industry,” it added.
Cell C reported a reduction in earnings before interest, taxes, depreciation, and amortisation of 509% due to “revenue reduction, the continued evolution of direct expenditure in line with the network transition plan and lower operating costs”.
Jorge Mendes, Cell C CEO, said he is confident that the company is well-positioned to drive growth.
“With our newly formed management team, building a great culture, a fully operational network, and a robust strategy, Cell C is well-positioned to drive growth and profitability,” said Mendes.
“We have implemented several strategic initiatives to drive revenue generation and reverse the struggling performance we experienced in the past.”
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