South Africa’s second and third largest network operators Cell C and MTN have finally signed the long-negotiated expanded roaming deal. Following this deal Cell C will now have access to MTN’s network in areas where it does not have coverage.
This agreement will also see Cell C’s 4G network coverage to be extended to 95 percent of the population. Cell C customers will have access to more than 12,500 sites, of which 90 percent are LTE enabled.
This roaming agreement is transformative for Cell C. The company is no longer restricted by the high costs of building a network footprint and it can now focus its energy and efforts into developing innovative and disruptive service offerings that will be welcomed by data-hungry consumers.
“This is a win-win all round as it has long-term benefits for the economy, the industry and ultimately consumers,” Cell C new CEO Douglas Craigie Stevenson said.
According to Business Day South Africa, using MTN’s network will reduce Cell C’s capital expenditure costs on building its own network, a boon for the debt-laden operator still pursuing a recapitalization that will improve its overall liquidity. The operator had R8.9bn in debt at the end of the most recent financial year.
The two operators will maintain their spectrum, and each party will use their own frequencies. Cell C will retain all its licenses, and control its core network, transmission, billing system, and subscriber management.
This deal with MTN will hinder the takeover bid by South Africa’s fourth-biggest carrier Telkom, which is 40percent owned by the state. Telkom in a statement said that it has substantially concluded its due diligence, but discussions are still at a preliminary stage. However, the statement further said that potential acquisition will be subject to Cell C completing a financial restructuring to ensure its gearing levels are reduced to a sustainable level, as specified by Telkom, and commercial contractual relationships are renegotiated to terms acceptable to Telkom.
Following this announcement of MTN and Cell C agreement, the shares of Telkom went down to 4.29 percent by 0758 GMT, while Blue Label shares were up 4.71 percent and MTN shares were flat.