In this ITWeb OTR TV interview, Nicola Mawson speaks with Cell C Jorge Mendes about its strategy post listing on the JSE.
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While it’s not Cell C’s “divine right to succeed”, CEO Jorge Mendes is convinced it will not go down the same path as Virgin Mobile and Red Bull, both of which failed.
Speaking with ITWeb days after the mobile virtual network operator (MVNO) made its debut on the JSE, Mendes said Cell C’s strategy is “unique” and “very deliberate and intentional”.
Cell C was spun out of Blu Label Unlimited on 27 November, and within minutes of its JSE debut, 4 000 shares traded, with the stock debuting at R27 – a 50c per share improvement on the final pre-listing price.
When ITWeb interviewed Mendes, the share price had gained to R31, although it was trading at R28.44 as of the time of writing.
Cell C CEO Jorge Mendes. (Photograph by Nicola Mawson)
“We firmly believe this is the telco of the future. So, we’re super-excited,” commented Mendes.
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Virgin Mobile South Africa launched in 2006 as the country’s first MVNO, riding on Cell C’s network and backed by Richard Branson’s Virgin Group.
Fifteen years later, it closed shop after a failed business-rescue process triggered by weak demand, shifting market dynamics and the economic shock from COVID-19.
Red Bull Mobile, likewise, failed to get off the ground after launching locally in South Africa in February 2011 as a partnership with Cell C. The MVNO, aimed at youth, offered aggressive tariff plans and entertainment-led content.
Red Bull Mobile never reached sufficient scale, and, in May 2015, Cell C announced the partnership would end.
Mendes is convinced Cell C will not have the same fate as these MVNOs, as it has solved all the issues that led to the demise of Virgin Mobile and Red Bull.
Cell C’s share price is up 3.42% since it listed on 27 November.
“We genuinely believe that if you don’t have the following ingredients, the likelihood of success is not there. And those ingredients are a large customer base; a high utility product like voice, data, electricity and banking; physical distribution; and digital distribution.”
To ensure success, Cell C will leverage its capex-light strategy, which is based on partnerships with MTN and Vodacom, so it doesn’t have to invest in base stations, noted Mendes.
Instead, it can plug that money into customer-facing solutions, such as partnerships with banks, retailers and call centres to increase its reach, he explained.
“We’re going to put in a huge amount of effort to make sure we are successful.”
Mendes pointed out that Cell C already works with distribution partners that have strong customer numbers. These include Capitec and Shoprite, which is the largest retailer in South Africa. “You need the Capitecs of the world; you need the FNB Connects of the world.”
Cell C can leverage Shoprite’s 3 000-strong store footprint to offer mobile rewards when customers buy groceries. The retailer’s scale makes the model attractive, said Mendes.
“Fast-forward down the line, in a year’s time… you could order groceries at home and rather than paying for the delivery via Sixty60, you could get that for free, or you could get a reduction.”
Cell C is also opening stores and has 72 outlets. “All of our capex is customer-facing.”
Cell C underwent a rebrand on 15 August last year. (Photograph by Nicola Mawson)
The operator’s brand momentum has been strong, according to Mendes. “It’s been fantastic, so the brand is really starting to look beautiful out there.”
Cell C is “a South African brand” launched 24 years ago in the market and is getting “a lot of resonance” as a “consumer champion” with strong value propositions and credibility returning, said Mendes.
“We’re starting to see hope, we’re starting to see optimism, and customers are starting to vote with their feet and wallets.”
