Encouraging signs at Cell C

Blue Label Telecoms has released its financial results for the six months ended 30 November 2024, revealing slight revenue growth for Cell C.

Blue Label Telecoms is Cell C’s largest shareholder. It holds a total economic interest of 63.19% in Cell C, with 49.53% of the shareholder voting rights.

The mobile operator also reported a net loss after tax of R149.2 million, which is a significant reduction over the R337 million loss reported for the same period in 2023.

During the period, Cell C’s revenue increased from R5.96 billion between 1 June 2023 and 30 November 2023 to just under R6 billion between 1 June 2024 and 30 November 2024.

Blue Label Telecoms noted that Cell C will be able to continue as a growing concern for the foreseeable future.

“Management considered the changes made to the Cell C business strategy, the successful renegotiation of key service agreements and IT support, enhanced senior executive team, continued focus on operational expenditure, optimisation of traffic, and implementation of a fixed cost infrastructure,” it said.

“This, together with the effects of the capital and debt restructuring of the business as a result of the recapitalisation of Cell C, is expected to improve both the liquidity and performance of Cell C.”

While Cell C remains technically insolvent, it has improved its equity position year-on-year.

The mobile operator’s assets totalled R13.8 billion as of 30 November 2024, while its liabilities amount to R17.1 billion, giving it a negative equity of R3.3 billion.

This is an improvement on the R4.4 billion in negative equity reported for Cell C as of 30 November 2023.

However, its equity position has worsened when you compare its current balance sheet to that reported for the year ended 31 May 2024.

At the time, it had R14.1 billion in assets which were valued at R3.2 billion less than its liabilities of R17.3 billion.

While it’s liabilities came down, so did its assets, increasing negative equity by R100 million between 31 May and 30 November 2024.

The Blue Label Telecoms Group’s overall results reported a slight revenue decline from R7.58 billion for the period ended 30 November 2023 to R7.24 billion for the same period in 2024.

At the same time, its profit after tax declined by roughly 3.5% from R413.2 million as of 30 November 2023 to R398.9 million as of 30 November 2024.

However, the company noted that only gross profit earned on “PINless top-ups”, prepaid electricity, ticketing, and universal vouchers is recognised as revenue.

“On imputing the gross revenue generated from these sources, the effective growth in revenue equated to R3.5 billion (8%), resulting in a total revenue of R47.4 billion compared to the prior period of R43.8 billion,” it said.

“Gross profit increased by R28 million (2%) from R1.598 billion to R1.626 billion, corresponding to an increase in margins from 21.08% to 22.44%.”

The table below provides a summary of Cell C’s and the Blue Label Telecom Group’s financial results for the six months ended 30 November 2024.