Cell C South African market strategy has been riddled with strategic errors. In 2008, former CEO Jeffrey Hedberg stated that Cell C had a 3G-ready core network. However, he said that the company would not invest in 3G technology. “3G is hype,” Hedberg said, “and we won’t fall prey to hype.”

In 2009, without the shortsighted Hedberg as CEO, Cell C invested R5-billion in HSPA-plus technology. The network, Cell C said, would offer speeds of up to 21 Mbps. Although the rollout has progressed well, the HSPA-plus network has struggled with both coverage and quality.

The new CEO, Alan Knott-Craig, is reportedly looking for a 3G roaming agreement while the company fixes the problems with Cell C’s HSPA-plus network. Both Vodacom (News - Alert) and MTN are allegedly with Knott-Craig at the negotiating table, although none of the companies will comment on the matter. MTN was especially emphatic, stating that the company “does not respond to market speculation, rumor or any specific corporate activity.” Cell C already has a 2G roaming agreement with Vodacom.

South African customers have complained that Cell C simply can’t handle network traffic, particularly during end-of-month rushes. One commenter on South Africa’s iGeek.com blog noted that Cell C technicians blame the problem on their 900 MHz standard. While the standard may go further, saving Cell C money on constructing towers, too many users on too few towers equals frustratingly slow network speeds.

Other iGeek.com commenters suggest that Cell C picked up a substantial number of customers when it dropped its prices but that its infrastructure was unprepared to handle the traffic flow.

Cell C is currently South Africa’s third-ranked cellular service provider. Knott-Craig, who has been at the helm since April 1, recently deployed a Least Cost Routing service for small businesses called LCRAnyNet. For a rate of only R150 per SIM card, outbound business calls will be routed to the cheapest available network.

Cutting costs has always been Cell C’s forte. Network coverage and service quality have not.