Cell C not paying its bills

Cell C is not paying all its bills, and many of its suppliers, partners, and even the Independent Communications Authority of South Africa (ICASA) had to make special arrangements to get their money.

The Department of Communications and Digital Technologies recently revealed that Cell C had failed to pay for its new spectrum allocation.

The spectrum auction took place in March 2022, and Cell C secured 10 MHz in the 3,500 MHz band for R288 million.

However, the telecommunications regulator ICASA has reportedly not received payment from Cell C for its new spectrum allocation.

Business Times reported that Cell C risks losing its newly acquired spectrum if it does not pay for it soon.

Cell C would not comment on the issue. It told Daily Investor that the spectrum auction matter is between Cell C and ICASA and is being addressed.

The telecommunications regulator is not the only organisation which has not received payment from Cell C.

Many of Cell C’s core suppliers and partners, including its network suppliers MTN and Dark Fibre Africa (DFA) and its landlord Attacq, suffered through non-payment.

MTN has often reported “unrecognised roaming revenue” related to Cell C, which is a fancy way of saying Cell C did not pay its bills.

Well-placed people close to the partnership told Daily Investor that payments from Cell C to MTN for network services remain unreliable.

Neither MTN nor Cell C wanted to comment on the issue. MTN said it does not discuss contractual or financial information regarding our customers, and Cell C said it is confidential.

Dark Fibre Africa (DFA), which supplies wholesale fibre infrastructure to Cell C, also had to make alternative arrangements to get its money.

Cell C racked up R275 million in debt with DFA. This debt was transferred into a new special purpose vehicle (SPV) in exchange for a 10% shareholding in Cell C.

The special-purpose vehicle, SPV5, is required to repay the debt of R275 million in tranches from 31 December 2024 to 31 December 2026.

Blue Label Telecoms, which has a 63.19% effective economic interest in Cell C, issued a guarantee in favour of DFA to repay its debt by SPV5.

Cell C’s landlord, Attacq, was another company which has not been paid by Cell C and had to make other plans to get its money.

Attacq’s results for the six-month period ending 31 December 2022 revealed that it expects R31.1 million of Cell C’s outstanding rent not to be recovered.

Attacq and Cell C also amended their lease agreement in 2022 in light of Cell C’s debt recapitalisation.

With the renewed lease agreement, Cell C only continues to rent a small part of its previous campus. New tenants will occupy its walk-in centre and warehouse.

Attacq told Daily Investor that it entered into a contractual agreement with Cell C to recover outstanding rent. The agreement is for R64 million.

The money would be paid to Attacq in two bullet payments due in 2024 and 2026. The outstanding rent would also carry 6% interest.

Daily Investor asked Cell C whether it is up to date with all its payments to its partners following its recapitalisation transaction. It preferred not to answer this question.

“Cell C, like other entities, has payment arrangements with its creditors that are of a confidential nature between the parties,” it said.