For the financial year ending 31 May 2022 Cell C made a loss of nearly R2.5 billion, owner Blue Label Telecoms has reported. Back in 2017 Blue Label bought 25 percent of the telco for a total of R5.5 billion, which was done in a restructure to save the company from bankruptcy. Although Blue Label co-CEOs Brett and Mark Levy were optimistic about Cell C’s potential and expected a turnaround in its financial and operational performance, it hasn’t materialised and questions have been raised to its viability.
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Back in May 2019 Blue Label had impaired its investment in Cell C to nil, which means it no longer recognises the losses in its overall financial results.
“As the Group’s share of Cell C’s losses exceed the carrying amount of the investment (Rnil), the Group has ceased recognising its share of further losses,” Blue Label states in its report. “If Cell C subsequently generates profits, the Group will resume recognising its share of profits only after its share of the profits equals the share of losses not recognised.”
Since acquiring Cell C, Blue Label’s reporting of net results for the business makes for grim reading:
- 2018 — R1.14 billion net profit
- 2019 — R8.03 billion net loss
- 2020 — No figures reported
- 2021 — R2.453 billion net loss
- 2022 — R2.448 billion net loss
Cell C has defaulted on a variety of loans it used to stay afloat in tough times. Blue Label announced on 4 August 2020 that Cell C had defaulted on R3.1 billion repayment of First Priority Senior Secured Note.
“Currently, none of the bilateral loan facilities have been accelerated,” Blue Label stated. “Noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness.”
