Blue Label Telecoms recently disclosed its annual results for the year ending on May 31, 2024, which revealed that Cell C incurred a before-tax loss of US$1,2 million between June 1, 2023, and May 31, 2024.
As the largest shareholder of Cell C, with a total economic interest of 63.19% and 49.53% of the shareholder voting rights, Blue Label Telecoms stated that Cell C’s revenue decreased from US$664 million to US$630 million. After factoring in a rebate and over-provisioning on taxes from the previous year, Cell C’s net profit after taxation was US$16 million, significantly lower than the profit reported in the previous year.
It’s important to note that the net profit after taxation of US$260 million in 2023 included extraneous income of US$388 million related to the effects of a recapitalisation transaction. This income was mainly associated with debt release, with secured lenders agreeing to 20c to the rand as part of the recapitalisation. This suggests an improvement in Cell C’s operational performance over the last year.
Despite this improvement, Cell C remains technically insolvent, with its liabilities of US$957 million exceeding its assets. Nevertheless, the balance sheet appears to be better. This indicates a positive trend in cleaning up the balance sheet and moving towards solvency.
It is worth noting that Cell C is still reliant on The Prepaid Company (TPC) to meet its working capital needs. As part of the recapitalisation transaction, TPC is obligated to purchase US$400,000.00 of additional prepaid airtime through four quarterly payments.
Cell C’s new CEO, Jorge Mendes, who took over in July 2023, has been instrumental in stabilising the leadership and establishing a strong team. Mendes emphasised the importance of building a great and inclusive culture to navigate both good and bad days. Under his leadership, Cell C has focused on fixing the basics, addressing operations and structures, and identifying key business drivers to drive high performance and profitable growth.
Cell C reported witnessing year-on-year revenue growth in the third quarter of 2023, signifying progress. Additionally, the mobile network performance has seen significant improvements. Cell C’s average download speed for the year-to-date is 32.17Mbps, an average upload speed of 11.03Mbps, and an average latency of 43.48ms. These enhancements have elevated Cell C’s network quality, positioning the company third behind MTN and Vodacom.
