Cell C not headed for all-out capex war – Levy

JSE-listed Blue Label Telecoms has no immediate plans to make mobile operator Cell C a top contender in an all-out capital expenditure (capex) war with top mobile operators MTN and Vodacom, but will rather narrow the focus of its latest acquisition to the strategic deployment of the “best” urban long-term evolution (LTE) network and delivering the best experience to the customers it already has.

Speaking at an Investment Symposium hosted by Huge Group, Wits Business School and the Investment Analysts Society of South Africa, in Johannesburg, on Tuesday, Blue Label joint CEO Brett Levy said Cell C’s capex spend of about R2.5-billion to R3-billion a year would be maintained.

However, its deployment would be more strategic and focused on building an “exceptional” number-three operator rather than placing strain on its bottom line in an attempt to match the R8-billion to R11-billion a year spend of South Africa’s two leading operators.

“Capex is about focus. You cannot be everything to everyone,” he told delegates, pointing out that Cell C would focus on urban and LTE.

“Cell C will build the best LTE/4.5G network this country has to offer in urban areas. When you step outside the network, you will roam – we have a great roaming deal with Vodacom,” he said.

To Levy, it was not about becoming the first or second network, with Vodacom and MTN holding strong positions and doing a good job.

“We know exactly what we want to do. We know who our client is. We know where our client is. And we know exactly what we want to build,” Levy said, adding that the aim was to provide the current customers with the “absolute best experience”.

Being the “smallest of the three” operators, excluding Telkom’s mobile network, Cell C holds excess spectrum and capacity which will allow it growth of about 4% to 5%.

For now, Cell C will be an "unbelievable number three" with controlled capex and a very clear vision.

Earlier this year, Blue Label concluded its complex R5.5-billion acquisition of a 45% stake in Cell C, with a subsequent vertical integration and synergies in product distribution creating a value proposition to Blue Label, Cell C and its customers.

Cell C now also has a sustainable capital structure to enable it to deliver on its strategic ambitions.