Cell C, South Africa’s fourth-largest mobile operator, is capitalising on the strengths of its larger competitors, Vodacom and MTN, to enhance its network capabilities.
This is according to Cell C chief technology officer Schalk Visser, speaking to ITWeb TV yesterday in a wide-ranging interview following a recent ruling by the Advertising Regulatory Board.
The board found that Cell C’s advertising campaign, “Now on SA’s Best Network”, could be misleading.
The operator has embraced a “capex-light” model – a strategic move to scale back capital expenditure by outsourcing network infrastructure instead of building and maintaining its own.
As part of this approach, Cell C no longer owns its own mobile network infrastructure and instead relies on roaming agreements with Vodacom and MTN.
A long-serving executive, Visser joined Cell C in 2012 during Alan Knott-Craig’s tenure as CEO and has been part of the company’s evolution ever since.
“The Cell C journey has been interesting. We were always in the business of trying to catch up with the bigger players (MTN and Vodacom) in terms of investing in the network.
“When we started implementing this new business model, we were sitting at around 5 500 sites, whereas the competitors were sitting at around 12 000 sites each. Half of our sites had LTE on them and the competitors had a higher percentage of the technology. For us to catch up, it was not possible and it was not a sustainable model to continue with,” Visser explained.
He recalled that since 2012, Cell C has undertaken several recapitalisation efforts to raise funds for network expansion.
“As you can imagine, you cannot get the amount of money [needed] to catch up with these guys. We did some calculations at that stage to look at how much it would cost us to catch up. Let’s say theoretically they didn’t invest − we were going to spend R40 billion and we were going to be at parity with them if we were lucky. So, it was just not a sustainable business and, therefore, we went to the new business model that we implemented.”
Cell C chief technology officer Schalk Visser. (Photograph by Lesley Moyo)
Commenting on the Advertising Regulatory Board’s decision, Visser said the controversial ad campaign was rooted in Cell C’s renewed commitment to its users.
“If you look at what we are offering to our customers today, we have got MTN with around 13 500 sites and Vodacom with about 14 000 to 15 000 sites. We’ve got two virtualised radio networks on both of these infrastructure players with like-for-like parity, and we are able to give our customers the best of both,” he said.
“The purpose of our brand campaign that we went out with as ‘Now on SA’s Best Network’ is just that. I think the challenge comes with where we should have said ‘Now on SA’s Best Network(s)’.”
Visser said Cell C’s capital-light operating model is one of its most significant advantages. “If you think of it from an investor perspective, the likes of Vodacom and MTN each invest at least R10 billion a year. A lot of that money goes into their radio access networks – having to upgrade into future technologies such as 5G or 6G, as well as building new sites.
“As part of the business model that we’ve implemented, we get access to those sites as they come up. So, we have a reduced capex spend and we changed that into an opex spend based on the roaming agreements we have in place with Vodacom and MTN.
“We can now focus our capex and our investments in our core and billing systems so that we can differentiate to customers on the services that we provide.”
Turning to legacy network technologies, Visser stressed the importance of phasing out 2G and 3G in collaboration with infrastructure partners.
The urgency of this transition has been highlighted by new Opensignal data, which shows South African users still spend up to 10% of their time on 2G and 3G networks. This comes as the Department of Communications and Digital Technologies aims to sunset these technologies by December 2027.
“2G and 3G are not as efficient as a resource on radio access networks like 4G and 5G. We are working very closely with our infrastructure partners to switch off 2G and 3G,” said Visser.
“The challenge is that a big portion of the devices that are on the network still don’t support 4G and 5G, or VoLTE for that matter. So, if you switch off the 2G and 3G layer, there will be no voice services if you don’t have a VoLTE-capable device.”
He acknowledged government’s progressin reducing ad valorem tax to ease the import of modern handsets. “But there isa lot more that needs to be done to put the right device into the hands of thecustomer so that we can switch off 2G and 3G.”
