Profitable within two years

ADSL South Africa (Broadband South Africa), 19 April 2007

Cell C stated that the company plans to become profitable within the next two years. This comes despite new allegations that Cell C ‘…is not performing well, staff members are resigning en masse, and major shareholders are reconsidering their investments’ (Cell C expects profitability soon, Senne, 16 April 2007).
 
What about claims that Cell C is facing a financial meltdown?
 
Cell C rubbished all such claims in a recent media statement.
 
“Let me be clear: management has a plan to reach profitability within the next two years” (Cell C expects profitability soon, Senne, 16 April 2007). This is according to Cell C’s Chief Corporate Officer, Zeona Motshabi.

In other words, a plan is in place to reach profitability within the next two years.
 
Is Cell C’s financial performance really as bad as rumours have it?
 
No, according to Motshabi, and we tend to agree with her.
 
‘…Cell C’s performance should not be measured on its profitability, but on its EBITDA and cash flow. This is consistent with how third operators measure their performance at similar stages of development around the world…’ Also, ‘Cell C has registered strong interest, taxes, depreciation and amortisation (EBITDA) growth over the past two years, resulting in an EBITDA breakeven in 2005’ (Cell C expects profitability soon, Senne, 16 April 2007).
 
In other words, there are more important factors to consider than profitability when one wants to measure Cell C’s performance at this stage.
 
What about expected earnings?
 
Cell C ‘…expects to double its earnings before EBITDA by the end of 2007’ and ‘…also plans to double its revenue by 2010’ (Cell C expects profitability soon, Senne, 16 April 2007). This is according to Motshabi.
 
What about allegations that ‘…major shareholders are reconsidering their investments’?
 
While it’s true that ‘…Cell C shareholders have given the management team a mandate to turn the company around…’ it won’t be the end of Cell C. ‘Cell C's focus is solely on operational issues, while issues regarding shareholding are being dealt with by the shareholders directly’ (Cell C expects profitability soon, Senne, 16 April 2007).
 
Motshabi said: “The decision to disinvest or stay is, therefore, purely a business decision facing the shareholders – one that all shareholders face in the normal course of business” (Cell C expects profitability soon, Senne, 16 April 2007). We tend to agree with Motshabi and BMI-TechKnowledge senior analyst, Richard Hurst, ‘…says even if Oger Telecoms disinvested from Cell C, it would merely be a changing of the guard’ (Cell C expects profitability soon, Senne, 16 April 2007).
 
In other words, don’t lose sleep over it, even if Cell C’s biggest shareholder Oger Telecoms disinvested from Cell C, the “…company would continue operations without missing a beat” (Cell C expects profitability soon, Senne, 16 April 2007).
 
ADSL South Africa (Broadband South Africa) wishes Cell C the best of luck in their drive to reach profitability within the next two years. We really hope they manage to silence the critics for good.