Two insiders on Wednesday told TechFinancials that Chinese investors are calling the shots at embattled mobile phone operator Cell C, which is in the process of retrenching its workforce.
Notices of retrenchment show that the troubled telco is facing significant liquidity constraints.
The notice seen by TechFinancials details the reasons for the retrenchments.
It states that Cell C has consistently under-performed and has losses of about R33 billion over the years. This includes losses of R4.2 billion in 2019 and R7.3 billion in 2018.
The company says it is currently facing significant liquidity constraints. As a result Cell C has defaulted on its obligations to lenders, shareholders, and creditors.
For more read: Cell C is in Such Bad Shape It’s Defaulting on Loans
In January, Cell C’s largest shareholder, Blue Label Telecoms, announced that Cell C had missed December’s interest payment on a $184 million (R2.7 billion) loan. It also failed to pay loans facilities with Nedbank, China Development Bank Corporation, Development Bank of Southern Africa and Industrial and Commercial Bank of China (ICBC).
Reliable sources informed TechFinancials that ICBC is not happy with the liquidity constraints at Cell C.
“The Chinese investors (ICBC) are the biggest organisation owed by Cell C,” said an insider.
“Chinese are running the show on retrenchments.”
The sources further informed TechFinancials that Chinese investors were implementing retrenchments and selling the property to downscale the business.
“They have kick-started the process to also sell corporate properties and recoup as much as they can from the failing business,” said an insider, who declined to specify which properties belonging to Cell C were being sold off by the Chinese investors.
The cash-guzzling operator lost 2.9 million subscribers for the year ended December 2019.
Cell C also declared a loss of R3.94 billion compared to R7.36 billion in 2018.
However, the company recently got a lifeline after the Competition Commission recommended conditional approval of the proposed acquisition of certain Cell C assets by special purpose vehicle Gatsby SPV.
Gatsby is a ring-fenced newly incorporated special purpose vehicle which was incorporated for the sole purpose of entering the proposed transaction.
TechFinancials was unable to reach Cell C and ICBC for comment.