Cell C’s revenue per user plummets

Cell C campus

Cell C’s average revenue per user (ARPU) plummeted from around R80 to R50 in two months, and the mobile operator could not provide details about the sudden 38% decline.

Cell C’s major shareholder, Blue Label Telecoms, provided details about the mobile operator’s ARPU in its annual results for the year ended 31 May 2023.

Blue Label said that the competitive mobile landscape in South Africa continued to drive data prices down.

“This, coupled with increased data usage, resulted in a lower ARPU versus the 2022 financial period,” it said.

It added that Cell C’s ARPU was high compared to the industry despite a reduced base, indicating higher spending per customer.

However, an analysis by Daily Investor showed that Cell C’s ARPU is significantly lower than Vodacom, MTN, and Telkom’s.

MTN has the highest ARPU in South Africa at R98, followed by Vodacom at R93 and Telkom at R86. Cell C’s ARPU, which sits between R70 and R80, is much lower than its competitors.

Cell C confirmed that its reported ARPU is based on the entity ARPU, also known as the blended ARPU, which is much lower than its competitors.

However, it said the prepaid market remains a material contribution for Cell C, which is not the case for the other mobile operators.

It said the prepaid ARPU for Cell C was R67 at the end of May 2023. This would be above the released data for MTN (R66), Telkom (R64), and Vodacom (R58).

“Therefore, our comment is based on the strength of our prepaid ARPU,” Cell C said.

Rapid Cell C ARPU decline

Although Cell C and Blue Label did not disclose the blended ARPU figures, it provided a chart comparing the ARPU with the subscriber base.

What was striking was the rapid decline in ARPU from March 2023 to May 2023, when subscribers showed a significant increase.

The ARPU plummeted from around R80 per user to approximately R50 per user over two months, which was never seen before.

Analysts speculated that the ARPU decline may be related to signing up numerous new Capitec Connect clients with multiple SIMs. However, this is not the case.

Capitec Bank CEO Gerrie Fourie revealed that Capitec Connect, launched in September 2022, boasts 1.25 million active SIMs with an average revenue per user of R77.

It means that Capitec Connect’s average revenue per user is significantly higher than Cell C’s prepaid ARPU. It should have, therefore, increased Cell C’s ARPU instead of decreasing it.

It raised the question of what caused Cell C’s ARPU to plummet from R80 in March 2023 to R50 in May 2023.

Daily Investor asked Cell C what was behind the rapid ARPU decline, but the mobile operator could not provide details about the issue.

It said it is in the process of concluding its audit in October and will be engaging the market and media in the first week of November.