Cell C, a mobile company ranked among the top 4 leading mobile network providers in South Africa is in huge financial trouble. The company was forced to delay in its debt payments and has hired Bowman’s Attorney to investigate its business practices.
The problems at Cell C are so severe to the point where Douglas Craigie Stevenson its interim CEO has published the challenges in an open letter.
In the letter, Stevenson confirmed that the company is facing financial and other challenges. The company will be implementing a new business plan that will help in simplifying its business model.
The company will also pursue recapitalization that will help in improving its capital structure, extract greater value from its roaming agreement, optimise its network revenue and usage.
Adding that while the company is facing real challenges and the plan is to develop active discussions with their stakeholders to secure more financial positions.
The goal for Cell C is to become significantly better focused on operational performance, sound business ethics and accountability throughout the business”.
On investigations and cost cutting, Stevenson said that Cell C has appointed Deloitte as independent financial restructuring advisors, Bowmans attorneys to investigate any parts of the business where irregular business practices are suspected and PwC to conduct a full procurement audit and review of the company’s processes.
Adding that, significant austerity measures has been implemented and reducing the company’s costs that do not contribute to revenue generating activities.
The Stevenson’s open letter has scared investors and this scare reflected in Cell C’s biggest shareholder Blue Label Telecoms’ share price. The investors are worried that Cell C has hired Bowmans because it has discovered problems that requires forensic investigation.
Again, Stevenson said the new management wants to ensure adequate clarity, transparency and make sure things are done correctly in the organisation.
He explained that, though there is a hiring freeze and contract review, jobs will not be lost but staffs will be trained to occupy new posts. The top priority in solving Cell C’s challenges and putting it on a platform for growth is concluding the recapitalisation of the company
He concluded that, “I want to emphasise that Cell C is strategically positioning itself and we are using our best efforts to be a strong participant in the industry, I firmly believe we are on the right track.”