PORTFOLIO COMIITTEE ON SMALL BUSINESS DEVELOPMENT 11 November 2016 PRESENTATION TO PORTFOLIO COMIITTEE ON SMALL BUSINESS DEVELOPMENT 11 November 2016 economic transformation policies biased to small, medium and micro enterprises (smme’s) and co-operatives

Cell C Delegation Mr. Sherhaad Kajee Chief Procurement Officer Email: sherhaad@cellc.co.za Mr. Joshua Moela Managing Executive: Government Relations Email: jmoela@cellc.co.za

overview In July 2001 Saudi Oger commenced operations when it originally established a 60/40 joint venture with a black economic empowerment (“BEE”) consortium, CellSAf, it commenced commercial operations in November 2001 (as the third entrant in the South African market). Currently busy with a re-capitalisation of it’s business which will result in shareholder change, Cell C will be majority South African owned and the Black Ownership will increase from the current 25% to 30% Cell C’s current BBBEE status is a level 3 and their current certificate is valid until 10 July 2017 Cell C spent R550 316 604 on Qualifying Small and Exempted Micro Enterprises during the 2015 Financial year

Procurement Policies The Cell C Procurement Policy has favourable payment terms; BBBEE EME and QSE Companies that are 30% Black woman owned and/or more than 50% black owned are paid within 14 days of invoice

Top 20 suppliers 2015 1 Huawei Technologies Africa (Pty) Ltd Network Equipment 2 Comm Equipment Handsets 3 Samsung Electronics 4 Apple Distribution International 5 The Media Shop (Pty) Ltd Media Buying 6 ZTE Corporation 7 ZTE Corporation South Africa (Pty) Ltd 8 Nokia Sales International Oy 9 Huawei Device Hong Kong Co Ltd 10 Blackberry UK Limited 11 LG Electronics SA (Pty) Ltd 12 AG Cellular 13 Morpho Cards SA (Pty) Ltd Sim Cards 14 Merchants (Pty) Ltd Call Centre 15 Hellocomputer (Pty) Ltd Advertising 16 Mobicell 17 RAM Transport (SA) (Pty) Ltd Distribution 18 Pure Distribution (Sony) 19 Quest Staffing Solutions (Pty) Ltd 20 Independent Communications Authority of South Africa ICASA Regulation

category breakdown of Top 20 suppliers 2015 Network 33% Handsets 41% Advertising 5% Icasa 1% Sim Cards Call Centre 2% Distribution 83%

Community services terminals Cell C’s CSTS Obligations Surpassed Cell C’s original obligations was to roll out 52 000 CSTs. Cell C far exceeded its target, with over 100 000 CSTs having been deployed due to market changes (Reduction of retail mobile tariffs) This program has ceased to be commercial viable and as of end October 2016, there are only 7099 CST’s active. Our current obligations have been amended to include connecting schools with tablets, routers, trolleys, projectors etc. We have rolled out 400 schools year to date by end 2016 we will have done 600 at a cost of R78 Million and are planning another 300 by March 2017 at a cost of R39 Million.

Pre paid distribution 35% of Cell C’s mobile revenue comes from the informal sector and this is distributed through six wholesalers who in turn empower thousands of agents who are on average earning between R2000 and R3000 per month Distributors: DNI 4800 agents Telestream 3000 agents Worldstream Awesim Likeminds 1800 agents Maxcell 600 agents

In 2017 we are looking at increasing our distributor base Pre paid distribution Our distributors also distribute to spaza’s contributing to the spaza revenue stream Our distributors offer the agents full back office, IT Support, Marketing Support, Training and mentoring. In 2017 we are looking at increasing our distributor base

Franchise distribution channel 178 out of 195 Cell C shops are franchised 39 Franchises 42% white owned 58% Black owned Year 1 2 3 4 5 Rental Support 100% 80% 50% 30% 85% Pay for Store Build (R1.2 Million) Full Training Rental Support R21 Million per annum