Vodacom has taken over all upgrades, credit vetting, and collections for Cell C’s contract customers after they were moved to Vodacom’s network, an industry insider said.

Cell C started to migrate its contract and broadband subscribers to Vodacom’s network in mid-December, a process which was expected to last two months.

The decision took many people by surprise as Cell C is building a “virtual network” in partnership with MTN and has a national roaming agreement with the mobile operator in place.

It was widely speculated that Cell C sold its contract and broadband subscriber base to Vodacom in a deal which involved Comm Equipment Company (CEC).

CEC is a wholly owned subsidiary of Blue Label Telecoms which was founded in 2015 with a contract to supply and finance all devices supplied by Cell C to the market.

Blue Label Telecoms, which owns 45% of Cell C, recently said the business model of this financing arrangement indirectly exposes it to the credit risk of Cell C.

Blue Label Telecoms’ management, however, said it has effectively mitigated this risk through the operational model used and the “very high collateral requirements” which are in place.

As part of this agreement, Blue Label Telecoms and CEC have the right to sell Cell C’s contract customer base in the event of a default by Cell C.

Blue Label and CEC agreement with Cell-C

Blue Label and CEC agreement with Cell-C

Considering Cell C’s dismal financial situation and the strange decision to move its contract customers Vodacom and not MTN, it is no surprise that many industry players thought a sale took place.

Cell C, Vodacom, and Blue Label Telecoms have, however, vehemently denied that any sale of subscribers took place.

Instead, Cell C said the migration of its customers to Vodacom forms part of its “network roaming model” which will see it become South Africa’s largest wholesale buyer of network capacity and infrastructure services from Vodacom and MTN.

While Cell C and Vodacom are trying to make the migration look like a simple roaming agreement, many industry players are disputing this.

One industry insider told MyBroadband Vodacom has taken over all upgrades, credit vetting, and collections for Cell C’s contract customers as part of the agreement.

This should not come as a surprise. TechFinancials reported in October 2020 that CEC planned to subcontract Vodacom to handle its credit vetting, call centre, billing, and collections for Cell C’s contract customers.

TechFinancials further reported that after the migration to Vodacom has been completed, Cell C customers will see Vodacom as their mobile provider.

MyBroadband can confirm that this is indeed the case. Instead of showing Cell C as their carrier name, contract subscribers are now shown Vodacom as their provider (see screenshot below).

Cell C contract subscriber home screen

Cell C contract subscriber home screen

With Vodacom reportedly taking over numerous services for Cell C’s contract subscribers and also serving all their network needs, these subscribers are now close to being Vodacom subscribers.

It is currently not clear if Cell C is still providing any services to its contract subscribers, or whether they are now essentially Vodacom subscribers, albeit unofficially.

MyBroadband asked Cell C for further information about its relationship with Vodacom, but the company would not provide any details.

Instead, it said “these commercial agreements, their existence and their terms are confidential between Cell C and the counter parties to the contract”.

Vodacom would also not answer any questions regarding its relationship, saying it is “contractually precluded from commenting on this”.

Now read: Why Cell C is moving its contract customers to Vodacom