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Trouble at Cell C

CEO publishes open letter.

The troubles facing financially distressed mobile operator Cell C have taken a dramatic turn. TechCentral received the following open letter from CEO Douglas Craigie Stevenson on Wednesday evening, which we publish here in full.

Key take-outs from the letter are:

  • Cell C has appointed law firm Bowmans to investigate “any parts of the business where we suspect that there may be irregular business practices and have also hired PwC to do a full procurement audit and review of our processes”;
  • The company has appointed Deloitte as independent financial restructuring advisors to assist in “optimising business processes”;
  • The company “continues to face real challenges” and is in “active discussions” with stakeholders “with a view to achieving a secure financial position”; and
  • It has “implemented significant austerity measures and has cut costs which do not contribute to revenue-generating activities, including a review of all contracts to ensure alignment with business priorities and a hiring freeze”.

More on this story to follow on Thursday. The full letter from Craigie Stevenson follows…

Dear valued stakeholder,

I was appointed in March 2019 as the interim CEO with the clear mandate from the Cell C board to right-size and optimise the business. There was an acknowledgement that the company faces, and continues to face, financial and other challenges.

In an intensive 120-day period, our new leadership team has a clear direction and have focused on ways to:

  • Execute and implement a new business plan, aimed at simplifying the business model;
  • Pursue a recapitalisation to optimise the capital structure;
  • Extract greater value from our existing roaming agreement; and
  • Optimise network revenue and usage.

The goal for Cell C is to become significantly better focused on operational performance, sound business ethics and accountability throughout the business.

Our efforts to improve the financial management of the business were enhanced in December 2018 with the board appointment of a new CFO, Zaf Mahomed, who has extensive business and finance experience. The financial results for Q2 2019 are showing some promising improvements to the bottom line, based on the measures taken since March 2019 to right-size the business. We have also appointed Deloitte as independent financial restructuring advisors to assist in optimising business processes. The company continues to face real challenges and we are in active discussions with our stakeholders with a view to achieving a secure financial position. In the interim, I can report the following:

  1. We have implemented a wide range of initiatives across the business to improve and meet the requirements of the King IV Code of Corporate Governance, including driving greater transparency to the board. The executive directors have had positive engagements with all major stakeholders.
  2. We have appointed attorneys Bowmans to investigate any parts of the business where we suspect that there may be irregular business practices and have also hired PwC to do a full procurement audit and review of our processes.
  3. The new executive team, along with our new management committee, is completely aligned with Cell C’s priorities and has committed to ensure changes that are necessary to deliver on the new business strategy.
  4. We have implemented significant austerity measures and have cut costs which do not contribute to revenue generating activities, including a review of all contracts to ensure alignment with business priorities and a hiring freeze.
  5. We have engaged in discussions with our staff and the company’s union in an open and transparent manner and adhering to all legal requirements. To this end we have:
    — Appointed a new HR executive, Juba Mashaba, with strong human resources and industrial relations expertise, and Juliet Mhango in the role of human capital development and transformation executive;
    — Focused on stabilising relationships with our labour force, and implemented a signed recognition agreement and formal engagement structures;
    — Actively communicated with employees on the direction and state of the business;
    — Re-emphasised that non-compliance with policies and procedures will not be tolerated;
    — Taken meaningful steps to inculcate a transparent performance culture aligned with the business strategy;
    — Cell C has a zero-tolerance policy towards illegal or unethical activity and has encouraged employees to use the independent whistle-blowers service to anonymously report irregularities or illegal activities.

We are also strengthening our board with independent non-executive directors in line with the King IV Code of Corporate Governance.

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.

Yours sincerely,
Douglas Craigie Stevenson
CEO (interim)

This article was originally published on TechCentral here.

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I guess Mr. Kieswetter will have to look elsewhere to collect in the short term.

Maybe government (the ones that can read) will notice mention of cutting cost?

Not sure they will understand the meaning though.

Cue an outraged union reaction in 3….2….1….

What is interesting is that there appears to be misconduct in their procurement arm. Let me guess: another bunch of fraudulent transactions with shady “empowered” suppliers. BEE strikes again.


This whole BEE thing has just degenerated into a free for all. From the top to the bottom and is fast in the process of bankrupting this country.

They all know it but choose to continue downhill.

Nothing about better products that will attract more customers (thus more money)? Guess my money will keep going to Telkom and Vodacom then.

“My money will keep going to Telkom”

Sjoe, I never thought I would live to see the day any one would utter those words…and I’m in my 20s!

Not sure if there’s room for four big mobile telco’s in South Africa in normal to good economic times. Never mind more difficult times.

Cell C’s financial “challenges” have long been an open secret in the market. Lately, Telkom has been blasting Cell C out of the water. Prepaid phones are still moving solidly, but the race to the lower end of the market. Margins are thin as rice paper.

Like ANC/EFF/ETC, Cell C can’t survive on popularity and social media likes only. It needs a solid cash flow. Don’t know how they’ll recover from this, but good luck.

Cell C provides abominably bad service, even by the low standards set by the other telcos. Agree that there is not room for four providers in S. A.

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