Business
Cell C Still Technically Insolvent Despite Signs of Financial Improvement
South African mobile operator Cell C remains technically insolvent, with its liabilities exceeding assets by R3.3 billion as of 30 November 2024, according to Blue Label Telecoms’ interim results.
Cell C’s assets total R13.8 billion, while liabilities stand at R17.14 billion, pushing its negative equity position to -R3.3 billion. This marks a slight deterioration from the -R3.2 billion recorded in May 2024.
However, compared to the -R4 billion recorded in the 2024 financial year, Cell C’s financial position has shown some improvement, suggesting that restructuring efforts are yielding results.
Blue Label’s Increased Investment in Cell C
Blue Label Telecoms, which owns The Prepaid Company, has continued to invest heavily in Cell C’s turnaround strategy.
- The Prepaid Company lent Cell C R1.03 billion to pay off debt claims.
- It also purchased R2.4 billion worth of airtime from Cell C.
- This increased Blue Label’s economic interest in Cell C from 45% to 63.19%.
While technical insolvency remains a challenge, these capital injections provide Cell C with much-needed liquidity to continue operations and reduce losses.
Cell C’s Financial Performance
Despite its negative equity, Cell C has shown signs of operational improvement.
- Net loss before taxation improved from R336 million in the prior comparable period to R149 million.
- Revenue and cost optimizations have started to take effect.
- Reduced losses indicate that the company is making progress towards stabilizing its financial position.
Blue Label’s Performance and the Impact of Cell C
Blue Label’s own financial results were mixed, reflecting the impact of its Cell C investments.
| Financial Metric | H1 FY24 | H1 FY25 | % Change |
|---|---|---|---|
| Revenue (R’000) | R7.58 billion | R7.24 billion | -4% |
| Gross Profit (R’000) | R1.59 billion | R1.62 billion | +2% |
| EBITDA (R’000) | R697 million | R653 million | -6% |
| EPS (cents) | 45.67 | 43.98 | -4% |
| Headline EPS (cents) | 45.91 | 46.01 | +0% |
The company recorded a revenue drop of 4% to R7.2 billion, but gross profit grew by 2%.
Blue Label noted that its reported revenue excludes PINless top-ups, prepaid electricity, and ticketing sales. When considering these, effective revenue growth increases by R3.5 billion (+8%), bringing total revenue to R47.4 billion.
Outlook for Cell C and Blue Label
Cell C’s technical insolvency remains a key concern, but ongoing investments and a gradual reduction in losses suggest that its financial restructuring plan is beginning to take effect.
With Blue Label increasing its stake and pumping billions into the telco, the coming months will be crucial in determining whether Cell C can return to positive equity and long-term sustainability.
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