MTN South Africa announced on Monday morning that it has signed a new long-form roaming and services agreement with Cell C, subject to certain conditions precedent.
In May 2018, Cell C signed its first roaming agreement with MTN, providing Cell C with 2G, 3G and 4G roaming services on MTN’s network in select areas of South Africa.
The new agreement will see this access expanded to enable Cell C to roam on MTN’s network in all areas of the country.
This is aligned to MTN’s strategy to further develop the group’s wholesale business and will allow both MTN and Cell C to harness greater efficiencies in providing telecommunications services while supporting a more sustainable and competitive industry.
MTN said it looks forward to transparent engagement with relevant stakeholders regarding this important industry milestone.
As noted in its quarterly trading update for the period ended September 2019, MTN SA said it continues to account for Cell C roaming revenue on a cash basis, and payments received since June 2019 have remained on schedule.
“Cell C continues to work on its recapitalisation and liquidity challenges which, if adequately resolved, would result in a change in MTN’s accounting treatment of Cell C roaming revenues back to an accrual accounting methodology.”
Cell C believes that the agreement will result in substantial cost-savings for Cell C by reducing network and CapEx spend through an extensive roaming arrangement
Cell C is 45% owned by JSE-listed Blue Label Telecoms, 15% by Net 1, 3 Special Purpose Vehicles (SPVs) collectively hold 30% (in turn held by 3C Telecommunications and further in turn held as 29.4% by the Employee Believe Trust, 45.6% by Oger Telecoms and 25% by broad-based black empowerment grouping CellSAf); and Cell C Management and Staff hold 10%.
Net 1 and Blue Label Telecoms have written down to zero the value of their stake of the embattled mobile network, Cell C, which recently reported an R8 billion loss in the year to June, hit by impairments.
The mobile phone company is under increasing pressure on its liquidity due to its high level of debt and the associated servicing costs.
During the third quarter of fiscal 2019, Cell C signed a term sheet with the Buffet consortium, but the implementation of this capitalization has been delayed. “
As a result, Cell C requested shareholder support and in September 2019, we agreed to provide up to R300 million of support to the company through the purchase of prepaid airtime,” Net 1 in its latest annual report, informed investors.