Massive cuts Cell C claims the turnaround strategy is paying off

On Tuesday (April 20th), mobile operator Cell C announced its annual financial results for the 12 months to December 2020. The company says this emphasizes improving the quality of revenue.

The group noted a significant decrease in staff during the period, in addition to a significant decrease in prepaid customers.

According to Cell C, interest, taxes, depreciation, and pre-amortization normalized profit (EBITDA) increased by nearly 30% as a result of the positive impact of the cost control initiative and the stabilization of subscriber earnings and gross profit. It became 4.1 billion rants.

However, total revenue for 12 months decreased by 8% to R13.8 billion (2019: R15.1 billion), and the majority of revenue contributions from the prepaid base were Rant 6.2 billion (2019: R6). 9 billion).

According to the company, a strategy to focus on more profitable customers as average revenue per prepaid customers (ARPU) increased by 28% year-on-year, despite a 15% decrease in prepaid subscribers. Is bearing fruit. To 9.2 million customers.

Prepaid customer YTD ARPU highlights a promising uptrend in the transition from R52 (H1: 2019) to R69 (H2: 2020) over the past four-month cycle.

Operator gross margin decreased by 7%, and cost optimization reduced overall direct costs by 9% to R7 billion (2019: Rant 7.7 billion). The total number of subscribers also exceeded 12.5 million (first half of 2020: 11.7 million).

Cell C’s chief financial officer, Zaf Mahomed, said the company suffered full-year losses due to impairment and one-time costs, but was encouraged for the last six months of 2020.

“Our results reflect the business in transition. We are beginning to see the impact of changes, such as focusing on profitable subscribers and shifting to revenue-generating activities through cost savings. The foundation is ready. “

EBIT improved from a loss of R $ 5.3 billion in the first half of 2020 to a profit of Rant 1.8 billion in the second half. In the last six months of the year, a net profit of R $ 2.1 billion was declared. However, according to Cell C, the pre-tax net loss was R $ 5.5 billion (2019: Rand loss of 4.1 billion) due to impairment losses and one-time costs in the first half.

The group pointed out a number of cost savings during the period, including a reduction of staff from 2,600 to 1,340 (loss of 1,260).

Douglas Craigie Stevenson, CEO of Cell C, said: Over the next three years, we will make a full transition to roaming on our partner network. All of these are aimed at providing our customers with a high quality network, innovative value delivery and ensuring a profitable and sustainable business. “

He added that lower overall operating costs reduced spending by more than 500 million rand on an annual basis.

“Cell C is currently generating cash and performance shows that the business is more operationally powerful. The target entity is able to effectively implement its business strategy and recapitalizes in the long run. Will benefit from a revised capital structure with manageable debt to ensure sustainable sustainability. “

Craigie Stevenson added that Cell C’s future focus is on evolving into a digital lifestyle company that offers cost-effective solutions and services by understanding customer needs.

“To stay competitive, Cell C had to take a different approach to large rivals with large investments in capital-intensive infrastructure. Multiple operators with it don’t make sense economically. We work together in infrastructure, but compete for products and services. “

read: Cell C reports a loss of R $ 7.5 billion

Massive cuts Cell C claims the turnaround strategy is paying off

Source link Massive cuts Cell C claims the turnaround strategy is paying off

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