Cell C to spend R8bn to build super-fast 4G network

Friday, Apr 10, 2015

CELL C unveiled its ambitious plan on Thursday to spend about R8bn over the next three years to build its super-fast long-term evolution (LTE) or 4G wireless network. This will significantly improve user experience and spur data usage.

The company said it would finance its business plan from internally generated cash, equity committed by its shareholders and vendor-backed debt facilities.

"The bulk of the facilities required for 2015 are already in place and the remaining facilities are currently under negotiation," it said.

The company has more than 19-million customers.

With 4G/LTE, consumers can, for example, expect to download video and music downloads in a fraction of the time of traditional 3G services.

"The significant investment in our network further confirms our shareholders’ commitment to Cell C and confidence in our continued strong performance," CEO Jose Dos Santos said.

Early this year, there were reports that Cell C’s parent company, Oger Telecom, was looking at selling the company. Although Cell C is growing its market share after years of stagnation, it is yet to make a net profit.

Oger chairman Mohammed Hariri told Reuters that the company had been approached by several interested parties but no decisions had been made. He declined to name the parties.

Mr Dos Santos said the company’s LTE strategy would be "focused and strategic, targeting metropolitan areas where people work and live". The first targeted areas for LTE rollout will be in Gauteng, KwaZulu-Natal and the Western Cape.

"Gated communities and high-density residential areas where there is a great demand for high-speed data will be one of our priorities," he said.

Cell C already has LTE sites on air in Gauteng, KwaZulu-Natal and the Western Cape, with a select group of customers testing the service.

The company has appointed Chinese firms Huawei and ZTE in the LTE rollout. It plans to launch commercially in the latter part of this year.

Vodacom has spent almost R10bn since last year on its network, while MTN has spent R6bn and this year will increase its investment to R10bn.

Mobile network operators are focusing on mobile broadband data in an effort to achieve growth and offset the steady decline in voice revenue.

But the rollout of the LTE/4G network is hampered by the lack of radio-frequency spectrum.

The move to digital terrestrial TV broadcasting from analogue will free up the spectrum that is expected to be allocated to the mobile industry.

Globally, broadband has been identified as a critical accelerator of economic and social development.

A report from global firm Cisco states that 4G will account for up to 56.1% of total mobile data traffic in SA by 2019, compared with 15.7% at the end of last year, a compound annual growth rate of 110%.

4G connections in SA will grow 14-fold from last year to 2019 at a compound annual growth rate of 69%. The amount of traffic carried by 4G will be 46% by 2019, compared to 40% at the end of last year.

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