South African operator Cell C said revenues for the first half slipped to ZAR 6.9 billion from 7.4 billion the year before. Over 89 percent of revenues came from service revenue, off 6 percent to ZAR 6.5 billion. Revenues from hybrid and FTTH increased 16.7 percent and 11.1 percent, respectively. While revenue from the wholesale business reflected a 7 percent decline due to an exit from wholesale agreements which diluted margins and congested the network, the MVNO portion continued to reflect a solid growth and delivered an 18 percent increase to ZAR 398 million.
Normalised earnings showed a 64 percent improvement to ZAR 1.8 billion, reflecting the overall impact of the new management team’s strategic focus on optimising its network as well as its emphasis on more profitable customers. The improved earnings were delivered against the backdrop of a depressed local retail environment, a decline in consumer disposable income and the national lockdown which resulted in reduced trading days during the period.
In line with management’s strategy to rationalise its subscriber base while retaining profitable customers, the prepaid customer base declined by 34.6 percent year-on-year. This translated into an 9.9 percent decrease in prepaid revenue, while the gross margin grew by 11.5 percent and prepaid average revenue per user (ARPU) increased by 26.9 percent.
Considering the once-off recapitalisation and restructuring costs, the reported EBITDA went lower to ZAR 1.2 billion from 1.4 billion a year ago.
Cell C said ZAR 5 billion worth of assets (network and right-of-use assets) were impaired due to the new MTN network arrangement. EBIT for the period was declared at a loss of ZAR 5.3 billion as a result, compared to a profit of 90 million last year. Excluding once-off recapitalisation and restructure costs, EBIT for H1 2020 would have been at ZAR 162 million, an improvement of 80 percent.
