How Zaf Mahomed Turned Around Cell C's Balance Sheet

Updated July 2026: Zaf Mahomed is now Group CFO of Oceana Group. This conversation was recorded in July 2020, when he was CFO of Cell C.

Zaf Mahomed joined Cell C as CFO in 2018 after a career built on fixing broken businesses, and he walked in with his eyes open: 8.7 billion Rand of debt, a shareholder base at Blue Label and Net1 that would eventually write off 7.5 billion Rand between them, and a business model that could not support what it owed. In this Inspire Series conversation, sponsored by EOH, Mahomed tells Colin Iles how Cell C went from loss making to EBITDA that doubled between the first and second half of the year, and lays out the blunt, repeatable playbook he used to get there.

Purpose, denial and cash: the rules of thumb behind the turnaround

Mahomed's approach to any turnaround starts with a short list of what he calls common sense rules, applied in order. First, a company needs a clearly understood purpose, revisited regularly, because without one "any road will get you there." Second, leadership has to escape denial fast: too many South African companies convince themselves their industry and business model are safe from disruption. Third, stakeholders, banks, advisors, boards, staff, have to be managed actively and told the truth, even when it is unwelcome. Fourth, the message has to be simple enough to explain in thirty seconds; Cell C's turnaround ran on four pillars. Fifth, and most pointedly, he argues the income statement is irrelevant during a turnaround: only cash matters. Cell C ran daily liquidity calls with its banks and stood up a liquidity committee of independent and non-executive directors to track its position in real time, a discipline that led to a deliberate default on its loans around mid-2020 while it negotiated an informal debt standstill toward recapitalisation, guided by advisors Deloitte UK and Bowmans. The final rule: be ruthless in execution, decide quickly, and fix mistakes fast.

From CapEx to OPEX: how Cell C turned its network into a profit centre

The operational core of the turnaround was a change to Cell C's network strategy, not just a balance-sheet repair. Cell C had been carrying roughly seven billion Rand in debt and close to seven hundred million Rand a year in lease rentals on six thousand towers of its own radio access network. Instead of continuing to build and lease that infrastructure, Cell C signed roaming deals to run on Vodacom's 2G network and MTN's broader capacity, keeping its own spectrum and core but buying capacity rather than building it. Mahomed calls this a straightforward CapEx for OPEX substitution: it turned Cell C from loss making into profit making by trading fixed infrastructure spend for variable cost tied to actual usage. Cell C also runs 21 MVNOs on its network, including First National Bank, showing how spectrum owners can monetise capacity without every operator needing its own towers.

Why South Africa has four telcos too many

Mahomed's harshest read is on industry structure. He points out that most developed telecoms markets run on two big infrastructure providers with the rest operating as MVNOs, while South Africa has four full network operators all building duplicate infrastructure, plus new entrants like Rain competing for the same customers. The industry invests close to 30 billion Rand a year against flat overall revenue, because the market is oversaturated with SIM cards relative to actual customers, many of whom carry multiple devices. He also argues the economics of a typical postpaid contract are skewed heavily toward handset manufacturers rather than telcos, with the bulk of a monthly bill going to pay off the device rather than the network. His prediction is that the 24 month postpaid contract, financing a handset bundled with airtime, data and SMS, is heading for extinction as bring your own device and prepaid models take over, accelerated by OTT platforms like WhatsApp eating into the traditional bundle.

How COVID-19 became an unexpected accelerant

Mahomed is direct that COVID-19 forced changes Cell C and its customers had been avoiding. Businesses that assumed customers needed bank branches, physical stores, or even chequebooks discovered almost overnight that they did not. Remote work also exposed hidden inefficiency: without an office to hide in, employees and executives alike had to show clearer value, because "passing the monkey" to a boss stopped working when everyone was remote. For Cell C specifically, the pandemic reinforced the case for the customer-centric, digital-first, capacity-light model it was already building, including working with content partners like Netflix and Disney rather than trying to own content itself, after Cell C's own content division, Black, had been costing the company 500 million Rand a year.

Is South Africa's telecom market oversupplied?

Yes, according to Mahomed. He argues four national network operators building parallel infrastructure for a market with flat industry revenue of around 30 billion Rand a year in investment is not sustainable, and compares it to each telco building its own highway between Johannesburg and Cape Town when one or two shared highways would do. He expects consolidation pressure to continue as margins get squeezed further by disposable income constraints and OTT competition.

What made the Ellerines turnaround useful preparation for Cell C?

Mahomed was CFO at Ellerines, the furniture retailer, when it went into business rescue, with African Bank as its sole shareholder going into curatorship shortly afterward. He says South Africa had roughly 750 too many furniture stores at the time, effectively financial services businesses disguised as furniture retailers, and that one of the big three chains had to fail because the industry structure no longer made sense. That experience gave him direct exposure to distressed-asset dynamics and hard decision making that he carried into Cell C's much larger turnaround.