Emerging From Challenges, Cell C Transform Its Customer Experience

While successful, current CEO Jorge Mendes noted that the operator had “lost its way a little bit” during a conversation with Telecoms.com Editor Scott Bicheno at Huawei’s recent Operations Transformation Forum (OTF) 2024 event in Istanbul, Turkyie.

That included two recapitalizations and write-offs of approximately ZAR 44 billion, according to Mendes, who took over as CEO around 15 months earlier, after 24 years at Vodacom.

“Now we're going through a significant transformation,” Mendes said. “And I think what we have is some really awesome ingredients to position ourselves differently and compete on the front foot with what really matters, which is the customer experience.”

At its core, those ingredients ultimately boil down to delivering voice and data at the highest possible quality and the lowest possible price points – and Mendes noted that how Cell C packages that proposition and brings it to market in a unique manner is of the utmost importance: “Otherwise, why would they come to us?”

How Cell C Is Moving Into the Future

Cell C’s strategy requires smart use of finite resources, and Mendes noted that his team’s evaluation showed the company would have had to lay out 35-40 million ZAR – and another 8 to 10 million annual thereafter – to follow the models of its two larger competitors, with no guarantees of success.

Instead, Cell C opted for a virtual radio access network (VRAN) with one of its partners, where it has its own spectrum band that it uses and that other operators can use, which is a revenue generator for the firm. 

One key is that Cell C has its own customer experience management tool suite and its own core billing system, so it operates as a full mobile network operator. But it has essentially shifted from a traditional CAPEX model to an OPEX model, in which Cell C essentially buys technology services from the #1 and #2 operators to match their quality of service, and run a multi-core operator network (MCON) in which Cell C can manage and move traffic as it sees fit.

That means Cell C has adopted an MVNO model, or mobile virtual network operator model, one that Mendes said the company has approached very intentionally.

Advantages of the MVNO Model for Cell C

Cell C now has a foothold with 13 of the 17 MVNOs in the South African market, with direct, indirect, and hosted models: “We want to make sure all roads from an MVNO perspective end up at Cell C,” Mendes said.

Cell C is achieving success by integrating vertical industry needs or behaviors – such as the requirements of a retailer or bank – with the capabilities of a telco. Then, at the customer experience management level, it can begin to tailor its value propositions to those specific businesses and sectors in a way that hasn’t been done before.

What used to be a wholesale business of selling high volumes of voice and data “over the fence” can now be uniquely customized, with profitable margins thanks to minimal distribution and technology costs.

“It’s proving to yield some really good results,” Mendes said, adding that traffic growth in the space is up 100% year-on-year, with revenue growth tracking around 20%.

“It's really healthy and we think it's a unique way of showing up in the context of the South African market,” Mendes said.

What’s Next For Cell C

In addition to the healthy growth of its MVNO business, Mendes said Cell C remains committed to its traditional prepaid and postpaid lines in its consumer division. He also expects Cell C’s relatively small fiber business to expand and grow so that the operator can offer a fully converged solution.

Next up: Cell C has begun building out a B2B enterprise strategy. Like with its MVNO business, it’s leveraging partnerships to pursue its goals, in lieu of hiring a massive corporate sales staff to approach different verticals. It is already seeing positive early results, according to Mendes.

The CEO added that convergence is more than a business or technology buzzword these days in the telco space, noting themes of convergence and intelligence throughout the OTF24 event.

Mendes noted that most customers – consumers and businesses alike – aren’t much interested in how calls get connected or how data transfers. Instead, they’re much more concerned with questions like: Am I getting the best prices? Am I getting commensurate value? Do I get great service? What is unique about this?

“You can see the convergence of sorts of platforms,” Mendes said, pointing to the fintech industry as an example. “I think we need to get to a level of simplifying that for customers. So the technology can be very complicated and efficient and effective in the background. But it's got to be so seamless and so intuitive for customers.”