Telecom: Cell-C's 'Hushed' Deal With Vodacom Raises Eyebrows

Cell C and Vodacom have reached a secret agreement in the recent migration of Cell C's contract and broadband user base to Vodacom's network, according to online tech publication MyBroadband.

Earlier this month, Cell C sent out a statement which stated: "the migration process has started with contract and broadband customers". This was a month after the migration started.

Many thought that this deal was in partnership with MTN, as Cell C already has a national roaming agreement with MTN, and it is currently building a "virtual network", using its spectrum, in partnership with MTN. The mobile operator also omitted in its press statement to say who it was partnering with. It eventually turned out to be Vodacom.

This decision by Cell C has raised many eyebrows in the industry. While speaking to MyBroadband Cell C would not say why it selected Vodacom over MTN. Instead, it stated that "the contract and broadband customers' migration arises from Cell C's network roaming agreement with Vodacom." It added that buying more Vodacom and MTN capacity is in line with their becoming a significant wholesale buyer of network capacity and infrastructure services.

In January 2020, Bloomberg reported that Vodacom was in talks with Cell C about buying its contract customers. In this deal, Vodacom would gain over a million high-paying subscribers to strengthen its position as a market leader, and Cell C would get the vital cash injection it desperately needs.

There was, however, a problem. A sale would require the companies to file a merger notification with the Competition Commission, which would face tremendous scrutiny. They would also jeopardise Vodacom and Cell C's respective spectrum applications.

Vodacom and Cell C denied that any subscribers were sold, which means an official sale was not concluded.

The current roaming deal could have also been structured in a creative way to hide what is effectively a subscriber base sale to avoid regulatory hurdles. MyBroadband asked Vodacom and Cell C whether they were in discussions regarding the sale of Cell C's contract subscriber base, but they declined to comment.

Speculation is rife that this could all be related to the planned spectrum auction, how is yet to be seen and yet to unfold.


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