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Lessons We Can Learn From The Cell C Rescue Plan

Recently Cell C realised that they are going to go out of business if they allow their debts to grow any further. They managed to end up with R8.03 Billion debt and little prospect of paying it off if they allowed things to continue as is. What can we learn from their plan to right the ship and stay in business?

Take Stock of Your Debt Situation

Annual reporting and tracking expenses and income like that done by Cell C might seem boring but as is seen in this case the figures can reveal wither you are doing well or need a serious rethink. Why not make a list of your monthly household expenses, your monthly debt payments needed and see how those two figures look when compared to your household income?

Acknowledge that Things have to Change

If your situation is like that of most people, you will probably find that you are spending more than you earn. The question is, how much more? If you are just spending a little more and you can shift your spending then great..but that’s not very likely given that 4 out of every 10 people who use credit in SA are months in arrears with debt repayments.

If you see that you are spending a lot more than you earn then you should mentally make the decision to do something about it. Don’t ignore your situation. It would be like ignoring a medical condition just because you don’t want to visit a doctor to find out what’s wrong. Cell C saw there was a serious issue and realised they had to take action.

Make a Plan

It can be tricky and you may need to talk to an expert but it is best to make a realistic plan to deal with your debts rather than just a vague idea that you are now…spending less. If you have a famiuly it is important to have everyone on board and without a plan, they will not know how they can help improve the situation. Cell C has decided to stop trying to pay to maintain a physical infrastructure and to rather hand their towers and some spectrum/bandwidth over to MTN. And unlike so many people they have the plan down in writing and everyone knows what it is and how it will work.

 

Get Extreme

If your debt situation is extreme then ask yourself if minor changes will realistically be able to offset the extreme problem. The answer is obvious. The more extreme the situation the more extreme your response is going to have to be. One way to deal with debt is to ask to repay the debt over a longer time period until you can start to pay a lot more towards the debt each month. This is what is done through debt review (also known as debt counselling). A court is involved so it gets documented and even small debts are often scheduled over a long time period. This relieves the immediate pressure and allows you to focus on earning more.

‘The more extreme the situation the more extreme your response is going to have to be’

It might seem extreme but Cell C realised that they cannot maintain a physical network and stay in business. So they will now be what is known as a Mobile Virtual Network Operator piggybacking off the expanded MTN network of towers. This way they reackon they can reduce costs and still stay competitive and repay their debts over time.

It is a BIG change for the network but desperate times call for desperate measures. Rather have a virtual network than be out of business and retain the physical infrastructure that is weighing them down.

If you are still struggling to make ends meet after making some changes then perhaps you have not made enough changes or extreme enough changes. It may require that you get entirely out of your comfort zone and think outside the box. Professional Debt Counsellors can often give you ideas that you have never even thought of to reduce expenses and maximise the income you do receive each month.

Learn From Cell C

It seems likely that these steps will save Cell C from falling into obscurity as a network that 16 million users used to use ‘once upon a time’. It called for some hard choices to be made based on some hard facts. The plan is pretty extreme and bold but when faced with R8 Billion in debt it is to be expected that the response would have to be pretty extreme for them to survive. If you face a similar situation (with a little less debt hopefully) then you should think about lessons you can learn from the Cell C plan.