Cell C’s plan to take on Telkom – and the top dogs

Following its recent rebranding, Cell C believes it can reclaim its third spot among South Africa’s largest telecommunications companies and even challenge incumbents Vodacom and MTN.

At an event on 15 August 2024, Cell C unveiled a “brand refresh” that revealed the company’s new logo and brand identity.

Cell C chief marketing officer Melanie Forbes explained at the event that the company did not have an awareness problem – South Africans are very aware of Cell C.

However, the company’s problem is consideration. South Africans need to consider Cell C as one of the top providers in the country. 

The company further added that it wants to have an impact beyond telco offerings and recommitted itself to making a meaningful impact on socio-economic development in South Africa.

“We have millions of South Africans who have remained loyal to the brand, and we want to honour the legacy that has kept Cell C in the Top 30 South African brands. This isn’t about new leadership,” Forbes said.

“We encourage all South Africans to experience the best of both worlds – the best network with the best value. Nothing should stop you – switch to see.”

To achieve these goals, Cell C is focused on changing the narrative around its network and service quality.

Cell C wishes to reclaim its identity as a “challenger brand” and a “disruptor” in the industry. 

This echoes CEO Jorge Mendes’s strategy when he told the media earlier this year that Cell C’s initial aim is to reclaim at least its position as South Africa’s third-largest telecoms company from Telkom.

Cell C was South Africa’s third-biggest mobile network operator for several years, but Telkom’s mobile subscribers surpassed it in 2020.

Part of their plan is to solve one of the core issues Cell C has faced since the beginning of its downward spiral – attracting and retaining skilled employees. 

“I want to have the best corporate culture in the country. I want staff retention and not staff attrition,” Mendes explained at the start of the year.

He reiterated this point at the rebranding event, saying he wants to make Cell C’s corporate culture not just the best among South Africa’s telecom companies but also the best among all South African companies.

Mendes told Daily Investor that, following the rebranding, he believes Cell C can comfortably take on Telkom and regain its third spot.

“We want to grow from where we are, firstly. We want to improve everything – all the KPIs that matter, like revenue, market share, customers,” he said.

“But the first goal must be to remain sustainable. We think momentum will start turning – I’m convinced this is a new business model in a more than two-player market.”

“I think we can comfortably become the number three, and then, from there, who knows? If the momentum goes in your direction…”

He pointed out that the challenge comes if Cell C becomes a strong third-spot player and starts encroaching on the market’s first and second players. 

This could threaten Cell C’s agreements with MTN and Vodacom, which currently hold the top two spots among South Africa’s largest telecoms.

Cell C announced in 2020 that it would no longer invest in rolling out its own radio access infrastructure and instead partner with MTN and Vodacom.

In other words, Cell C no longer operates its own mobile network and is dependent on Vodacom roaming for its contract subscribers and MTN for a virtual radio access network to serve its prepaid and MVNO customers like Capitec Connect.

Therefore, Cell C becoming a challenger to the two top providers could be seen as a threat to its largest partnerships.

Earlier this year, Mendes told MyBroadband that South Africa’s major mobile operators would prefer it if Cell C remains in a perpetual state of financial distress.

“The market needs us to succeed. We want to succeed, but not how they want us to,” Mendes told MyBroadband. “They want us to succeed by lying in an ICU with a drip in our arm. I don’t want that.”

Mendes never outright said who “they” are, but his meaning was clear – Vodacom and MTN would much prefer the status quo to a disruptive Cell C.

Asked whether he was concerned that Cell C depends on Vodacom and MTN for wholesale mobile network services, Mendes said he wasn’t.

Aside from the ethical considerations if Vodacom and MTN tried to short-change Cell C on network quality, Mendes said they also had a financial incentive to treat them well.

“I pay for the quality of service and data my customers use. I’m both of the networks’ biggest customers,” said Mendes.

“We’ve had great commercial conversations. They are fully aware of how we want to show up. We compete commercially. It’s nothing untoward.”

Despite the rebrand’s recent unveiling, Cell C has already taken steps to compete with the industry’s top dogs.

Recent network tests have shown a marked improvement in Cell C’s network quality, with the company’s mobile data network performance having improved significantly in the past year.

The mobile operator told MyBroadband that this is due to the new network strategy it has been implementing over the last four years.

The latest MyBroadband Insights network quality report revealed that Cell C’s average download speed increased from 28.70Mbps in Q1 2023 to 39.32Mbps in Q1 2024.

This improvement helped Cell C overtake Telkom and rank third behind MTN and Vodacom in network quality during the first quarter of 2024.