MTN and Cell C Fail to Reach Agreement on Commercial Partnership

MTN warned shareholders on Monday morning that its South African business failed to reach an agreement with Cell C on certain matters regarding their long-standing commercial relationship, MyBroadband reported.

Cell C no longer operates its own radio access network and relies heavily on MTN to serve its customers.

The two operators signed a national roaming agreement in November 2018. That initial deal gave Cell C access to MTN’s 3G and 4G networks.

The partnership expanded in August 2019. That expansion enabled Cell C to shut down its own radio network and move all traffic onto a virtual network operated by MTN.

Unlike a standard roaming agreement, the virtual radio access network uses Cell C’s assigned radio frequency spectrum. It provides Cell C access to MTN’s cellular network resources.

Cell C later granted MTN access to some of its frequencies through a spectrum-pooling agreement. The sector regulator, ICASA, approved that arrangement in 2022.

Both networks benefited substantially from the partnership. MyBroadband Insights’ quarterly network quality reports reveal steady improvements for all providers.

Those gains helped Cell C shed its reputation for offering cheap, low-quality network coverage. The operator can now provide network quality comparable to Vodacom and MTN.

Cell C also maintains a roaming agreement with Vodacom, which is primarily used by its contract customers. Dependence on Vodacom and MTN leaves Cell C with a weaker negotiating position.

Cell C CEO Jorge Mendes previously stated he was not worried about losing wholesale agreements or facing price gouging. He noted the deals also benefit Vodacom and MTN.

However, MTN took the unusual step of publicising its dispute with Cell C in a quarterly trading statement released on the JSE News Service.

MTN SA and Cell C have engaged extensively on the terms of their long-standing commercial relationship but have not reached agreement on certain matters, the company said.

These will be addressed through the mechanisms provided for in the parties’ agreement, while engagement on the terms of the relationship going forward continues, MTN added.

MTN did not specify which parts of the commercial relationship are in dispute. The statement served as a clear warning to Cell C, with MTN noting it would provide a further update when appropriate.