Cell C has reported a R3.4-billion profit in its maiden results as a JSE-listed company, but the eye-catching number owes almost everything to a once-off balance sheet restructuring rather than underlying trading performance.
The mobile operator, which listed on 27 November 2025 after a comprehensive debt-for-equity conversion, reported revenue of R5.7-billion for the six months to end-November – a year-on-year increase of just 1.8%.
More telling is the gap between reported and adjusted earnings. Reported Ebitda came in at R4.2-billion, inflated by a R3.5-billion gain from loans written off and converted to equity and a R356-million profit on lease terminations, along with other restructuring items.
Strip those out, along with R233-million in IPO transaction costs and a R140-million BEE-related accounting charge, and adjusted Ebitda was R917-million – a marginal 1.1% decline on the prior year.
The restructuring itself was substantial. Cell C entered its listing carrying negative equity of R8.3-billion and a net debt-to-Ebitda ratio of 4.3x. The pre-listing process converted R4.1-billion in debt owed to The Prepaid Company into equity, settled legacy lease obligations and brought the Comm Equipment Company – which had managed Cell C’s postpaid business and device financing – into the group for R2.15-billion, paid entirely in shares.
The result is a much cleaner balance sheet: net debt fell to R2.4-billion and the leverage ratio dropped to 0.6x. But the CEC acquisition also brought R1.4-billion in African Bank debt and R866-million in goodwill onto Cell C’s books.
Mixed operational picture
Beneath the restructuring, the operating picture is mixed. Wholesale was the clear standout, with revenue surging 22.5% to R840-million as Cell C’s mobile virtual network operator (MVNO) platform scaled past five million subscribers. Data traffic among MVNO users jumped 86% year on year.
Prepaid revenue grew a modest 1.6% to R2.7-billion, though subscriber numbers recovered strongly, adding more than a million in the period. Blended average revenue per user, however, continued to slide – falling to R84 from R93 a year earlier – weighed down by a 14% effective reduction in data tariffs.
Read: Cell C makes long-awaited JSE debut
Post-paid revenue edged up 2.3% to R1.2-billion, with management flagging a deliberate clean-up of low-value subscribers. The “other” revenue category, which includes roaming and incoming revenue, fell 11% as regulated mobile termination rate cuts – from 13c to 9c/minute – took a R90-million hit. A further cut to 5c/minute takes effect in July 2026.
Cell C also acknowledged liquidity constraints in its going concern note, citing seasonal working capital pressures and elevated spending on technology modernisation. The directors also explicitly conclude no material uncertainties casting significant doubt on going concern status.
Current liabilities still exceed current assets by R2.3-billion, and management said it is deferring selected non-essential capital projects to manage cash flow.
CEO Jorge Mendes struck an upbeat tone, describing the period as a “turning point” and pointing to the normalisation of legacy airtime discounts – which management estimates will add R135-million to earnings in the second half – as a near-term catalyst. He also said there is good opportunity for growth in the business market, where Cell C is expanding its focus.
But for a company that has spent years in restructuring mode, the question investors will be asking is when the operational turnaround catches up with the all the work that has been done on restructuring its balance sheet. — (c) 2026 NewsCentral Media
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