Cell C to Franchise Majority of Retail Stores Amid Market Competition

Cell C is set to franchise 44 of its 47 retail outlets in a strategic move aimed at creating job opportunities and fostering enterprise development. Despite concerns, the company reassures that no jobs will be lost, and it will maintain investment in its brand. 

Cell C’s Strategic Shift: Franchising Retail Outlets

In a significant move to navigate intense market competition, South African mobile operator Cell C has announced plans to franchise 44 of its 47 retail outlets. This decision comes amid financial challenges and aims to create new job opportunities and support small and medium-sized enterprises (SMMEs).

Job Security and Enterprise Development

While initial reports suggested that the franchising decision could impact at least 400 staff members, Cell C has firmly denied these claims. Chris Lazarus, Cell C’s Chief Officer for Sales, Distribution, and Regions, emphasized that the move is intended to generate more employment opportunities rather than reduce them.

“We’re embarking on a process to franchise the 44 stores that we have,” Lazarus told Kaya FM. “We’re also going to look at creating an opportunity of enterprise development and SMME, where our staff themselves can partake in the future ownership of some of these stores.”

In an interview with SABC News, Lazarus reassured that no staff members would lose their jobs. He explained that the terms and conditions of current staff contracts would be transferred to the new store owners, ensuring job security.

Maintaining the Cell C Brand

Lazarus made it clear that franchising these stores should not be seen as Cell C distancing itself from its brand. On the contrary, the company plans to invest further in the brand over the next 18 months. “The brand remains that of Cell C, and if anything, you’re going to see further investment in that brand over the next 18 months,” he said.

Financial Challenges and Stabilization Efforts

Cell C’s decision to franchise its stores comes as the company works to cut costs and stabilize its financial position. The mobile operator’s annual results for the 2022/23 financial year revealed significant insolvency, with liabilities exceeding assets by R9.294 billion.

In February 2024, Cell C’s parent company, Blue Label Telecoms, reported a R337-million loss for the six months ending November 2023, a stark contrast to the R5.81 billion profit reported for the same period in 2022. However, this profit was a once-off result from Cell C’s recapitalization in September 2022.

Despite these financial hurdles, Cell C remains optimistic about its future. In December 2023, the company highlighted its business stabilization efforts, showing resilience by maintaining a revenue of R10.09 billion for the year-to-date to September 2023, compared to R10.14 billion in 2022. Additionally, the average revenue per user increased from R74 in 2022 to R80 by the end of September 2023.

Looking Forward

Cell C’s move to franchise its stores is part of a broader strategy to stabilize its operations and foster growth through enterprise development. By allowing employees to potentially own and operate stores, the company hopes to build a more resilient and motivated workforce. As Cell C continues to invest in its brand and navigate financial challenges, it remains committed to maintaining its market presence and supporting economic growth in South Africa.