After taking the helm at Cell C in mid-2023, Jorge Mendes has laid out a clear and bold turnaround strategy for the company. In an interview with Smart Money hosted by Alishia Seckam, Cell C CEO Jorge Mendes provided an in-depth look into the South African telecom giant’s remarkable turnaround and ambitious plans for the future.
He highlighted how Cell C has evolved from a beleaguered operator plagued by financial woes into a lean, cash-flow-positive entity poised for expansion in a highly competitive market. Mendes, who has steered the company through turbulent times, emphasized the disciplined strategies that have restored stability and set the stage for long-term success.
Cell C’s transformation began with a comprehensive financial restructuring. Historically burdened by debt and operational inefficiencies, the company shifted to an asset-light model, which has significantly improved agility and reduced costs. This approach involved offloading non-core assets and focusing on core competencies like network quality and customer experience. Mendes noted that network performance has climbed to second overall in South Africa, with Cell C ranking first in 4G video experience according to independent benchmarks. Service revenue grew by 6% year-on-year, driven by diversification across segments, while wholesale revenue surged 13% thanks to robust MVNO (Mobile Virtual Network Operator) partnerships. Key collaborations with brands like FNB, Shoprite, and Old Mutual Connect have been instrumental, boosting data traffic by 127% and voice by 2% in the MVNO space.
Financially, the turnaround is evident in the numbers. Cell C returned to net profit, with profit before tax soaring over 200%. EBITDA remained stable despite one-off adjustments, and EBIT rose 5% to R1.3 billion on a normalized basis. Mendes attributed this to tight cost management, reduced depreciation, and lower finance costs. The balance sheet reflects recovery: total assets up 22%, liabilities down 8%, and equity increased by 21%. Pre-paid revenue grew 2%, with broadband up 18%, while mobile data traffic jumped 31%. However, blended ARPU dipped slightly to R78 due to base optimization and mix shifts.
Strategically, Cell C has invested heavily in technology and innovation. Mendes highlighted the deployment of Africa’s first cloud-native VoLTE solution, a next-generation billing system, and extensive 5G coverage testing. The My Connector platform enhances personalization through customer value management (CVM), while revamped post-paid offerings like Elevate Plus cater to evolving consumer needs. Distribution channels have been refreshed, including a new app, 50 revamped stores, and franchising underperforming outlets, which has yielded double-digit growth in acquisitions and renewals. Enterprise diversification and wholesale acceleration via A2P services and bulk SMS further bolster the strategy.
Looking ahead, Mendes is optimistic about sustaining momentum. The company aims for a potential JSE listing to unlock shareholder value, enhance governance, and access growth capital. Integration of the post-paid business, supported by the Competition Commission, will capture synergies across consumer, enterprise, fixed, and wholesale segments. Future projections include 10-15% normalized EBITDA growth for FY26, with CapEx focused on customer-facing tech at R650-850 million. Mendes stressed a high-performance culture, talent development, and AI-driven initiatives like fraud prevention to drive innovation.
Challenges remain in South Africa’s telecom landscape, marked by intense competition and regulatory hurdles. Yet, Mendes shared valuable lessons from the turnaround: the importance of financial discipline, strategic partnerships, and a customer-centric focus. As Cell C prepares for 5G commercialization and broader digital solutions, including IoT and fintech, Mendes envisions a sustainably profitable future.