Cell C CFO Zaf Mahomed on what it takes to turn a company around

Zaf relishes a challenge, and believes he's found a good one in the complex environment at Cell C.

Zaf Mahomed relishes a challenge. He has previously held roles at Ellerines, Tongaat Hulett, Johnson & Johnson and McDonald’s. And now, he’s tackling the beleaguered Cell C. Did he know what he was getting into when he took on the role? Absolutely.

“It’s been a fantastic challenge. It’s a very complex environment and from my perspective, a real opportunity. I did my research before I joined to make sure I knew what needs to be done. So nothing was a surprise. I left a great job at McDonald’s, but part of my DNA is that I love the challenge. I love the opportunity this presents. Turnaround and M&A is what I do.” 

He adds that of course, it’s stressful, “but it’s a good kind of stress. It’s good to be outside of your comfort zone.”

Over his 26-year career, Zaf has been in many industries, he says affably that he’s lost count, then tries – sugar, aluminium, textiles, medical devices, hospitality, property, mining equipment, furniture, retail, financial services, food and quick-service restaurants, and now telecommunications.

“I’ve been able to adapt to different industries and understand different business models. Everyone tells you that their business is unique, but that’s not always true. Cell C is complex, though, and that’s why I’ve come here.”
 
Problem solving at Cell C
Zaf says that over the next three to five years, given the state of the economy, businesses are going to face challenging circumstances, and CFOs are going to need problem-solving skills. He has already started to apply these in Cell C.

“We’ve had lots of successes in past year  – we have a clear roadmap of where to take the business over the next 18 to 24 months. Most importantly, it’s about managing stakeholder expectations. People just want to know what the situation is, and what you are planning to do about it.” 

He says that he’s been highlighting the liquidity roadmap that he and the Cell C managerial team have developed for the company. “It allows us to do the things we need to do. We don’t want a company that’s highly indebted. We want a company that will focus on operational performance. You’ve got to put governance structures in place so that you can run proper operations. And we’re starting to see the positive results from that.”

The liquidity roadmap is the first pillar of the turnaround plan. Second is developing a network strategy so that Cell C can manage its network capacity requirements in a more scalable and cost-efficient manner on our road to recovery.  

As the interview was taking place, the news was breaking that Cell C and MTN had concluded an extended roaming agreement and that Telkom had made an offer to acquire the organisation. Zaf says that the mobile operator’s focus remains on its turnaround strategy. 

Referring to the extended roaming agreement, he says that one way to look at the current network situation in South Africa is to imagine that between Johannesburg and Durban, there are four highways – MTN, Vodacom, Cell C and Telkom. “What we want instead is one highway with multiple lanes. The industry needs to take a long, hard look at it, particularly with 5G coming on stream. How can we invest for a future where there is competition and can still bring down the cost to communicate. At some point, when the shareholders aren’t getting a return, they will force people to the table. The industry has to learn how to deal with a low-profitability environment.” 

The third pillar is a recapitalisation. “At an industry level, there’s a huge challenge. What we’re finding in telcos is that revenue is flat while costs are going up. We’re selling more data for the same revenue. So we have to be sure that we are efficient at a company level. It’s a small market and we don’t have the economies of scale, while the capex requirements are significant. The industry is spending in the order of about R25 billion to R27 billion a year on capex. If you’re spending that amount of money, you’re expecting a return on investment, but in an environment that’s under stress, the customer is looking for a better deal.”

Lastly, there has been a focus on operational efficiencies and redirecting resources to revenue generating activities.  He believes there are significant opportunities for Cell C. “We’ve simplified the business model and we’ve got to cut our cloth accordingly. We’re trying to build a sustainable business that’s here for the long term. It’s not about a quarterly result. We can’t keep investing huge amounts of capital for no return.”
 
Zaf’s lessons for work and life
Zaf is no stranger to difficult working environments, and he says that the most challenging matter he’s dealt with has been retrenchment. “We had to do it in Zimbabwe when I was at Johnson & Johnson, and we had to shut down an operation. Business is about people. We talk a lot about strategy, but you need people to execute. If you’re not empathetic in business, you don’t have a moral compass.”

He says that what he learnt from the process was the importance of honesty. “All people want is honesty. I’ve seen that whether I’ve been retrenching, talking to a board, or talking to a lender. Yes, they will shoot you for delivering the message, but they get over it. You build credibility through honesty and transparency. And I’ve used that in this job in stakeholder management. I am using those lessons and building credibility with stakeholders here.”

He says that the most important characteristic of a great CFO, in his opinion, is problem solving. “Nobody wants to hear you tell them what the problem is. It’s easy to do the weather report, but very hard to change the weather. The expectations of CFOs these days are higher than in the past. You have to be a leader. It’s not just about looking at the numbers. It’s about leading people.” 

His leadership style, he says, is servant leadership. He believes that it’s important to treat people with respect, empower them, allow them to fail but create a safety net. “Failing is OK. I grew up in a generation where failing was not an option. But today, failure is a steppingstone.”

Zaf is not only a leader in his own organisation. He offers his time to mentor young CAs from previously disadvantaged communities. “I come from a disadvantaged background. I know how hard it is to succeed in that context. So I try to support a lot of people who have grown up like I have – without expecting anything in return.”

One piece of advice he shares is to find a job that makes you uncomfortable. “We’re taught as CAs to be conservative, which brings a sense of comfort. Be uncomfortable. You don’t want to work for the same company for 30 to 40 years. Those days are gone.”

As for his own next step, he says that he imagines that the Cell C turnaround will occupy him for at least three years.  What’s next? He says, “I’ll still be looking for challenges and turnarounds – it’s what I am good at, and enjoy doing.”
 
The importance of family
He says that his family is crucial to him – especially when he’s dealing with stressful business environments. “When you’re doing a turnaround in particular, it’s highly stressful. You want to be able to go home to a loving family. I look forward to getting in my car and driving home. When I get into my garage and see my family, it’s the best de-stressing I can get.”

He says that he tries to have dinner with his family every day, and that even though he works for a mobile operator, cell phones are banned at dinner. “My kids can have a go at me. A proper go. It’s a free environment and it teaches them they shouldn’t be scared of anything. At home I’m just Dad! It’s so rewarding to see them grow in front of you.”

And when we asked Zaf if there was anything else he’d like to share, he said that the CFO South Africa community has done a lot for him. “I’ve really enjoyed being a friend of the community since inception, and have been humbled to interact with other CFOs in the great network that they have facilitated.”