Blue Label Telecoms said on Monday that it is still locked in talks over a planned recapitalisation of debt-laden mobile operator Cell C, in which it holds a 45% stake.
The JSE-listed company first announced three months ago that it was in negotiations about the recap with Investec and other lenders. It issued a further cautionary notice on Monday – required under JSE listing rules – saying the talks are ongoing.
Blue Label first cautioned shareholders on 26 August that its wholly owned subsidiary, The Prepaid Company – the entity that holds the Cell C stake – had concluded a term sheet for an airtime purchase transaction with Investec, Rand Merchant Bank and other lenders.
“This arrangement is subject to the conclusion of all legal documentation and the fulfilment of conditions precedent under such legal documentations,” Blue Label said in the initial cautionary notice.
Last month, Cell C published interim financial results for the six months to 30 June 2021 that showed a marked improvement in its operational performance, including earnings before interest, tax, depreciation and amortisation of R736-million and profit before tax of R148-million. Revenue for the period fell by 5% to R6.6-billion.
“Cell C’s interim results for the six-month period to June 2021 highlighted continued improvements in profitability and operational efficiency as the fit-for-purpose entity implemented its new operating model, network strategy and attracted new customers through innovation in products and services,” the company said in a statement on 27 October at the time of the results announcement.
“A recapitalisation is the final pillar in Cell C’s turnaround strategy and will provide momentum to effectively manage the transition, focus on profitable revenue growth and the overall simplification of the cost base, putting Cell C on the path to long-term sustainability,” said Cell C CEO Douglas Craigie Stevenson in the statement. – © 2021 NewsCentral Media