COMPANIES: Cell C and MTN financials tell different sides of telecoms evolution story

Cell C and MTN recently released their financial reports, painting a contrasting picture of the telecoms industry's evolution. Cell C's CEO, Jorge Mendes, expressed satisfaction with their maiden annual results as a standalone company, noting a 57.4% jump in headline earnings based on IFRS EBITDA. However, CFO El Kope quickly clarified that "all these one-offs that then happen in the year affect your net reported number."

Management presented a more cautious H2 FY26 normalised standalone view, with earnings at R2.381-million.

Cell C had initially projected R1.5-billion to R1.8-billion in cash reserves per year but fell short, partially due to debt repayments. The company spent over R230-million on listing costs and offered significant discounts to retail agents selling their airtime. MTN's CFO highlighted that the mobile termination rates are tricky, as Cell C is currently a net payer, but future changes in traffic patterns could neutralize these revenues and costs.

The government's new End-User Subscriber Charter will restrict networks from selling short-term data bundles and force data rollover, reducing out-of-bundle revenues and margins. Despite this, MTN reported a 4% decrease in traditional voice call traffic, while internet data traffic surged by 47%. Both networks are shifting focus towards active, paying customers, abandoning the practice of giving out numerous inexpensive SIM cards.

MTN's prepaid division experienced a 3.3% revenue decline but managed to improve their in-month payback rate to 70% by tightening airtime services and cutting borrowed airtime. Cell C supports these regulatory cleanups, aiming to combat inactive SIM cards, estimated at up to 10 million monthly. Both networks are competing fiercely for virtual network operator (MVNO) customers, with Cell C currently controlling over 80% of the market.