Blue Label Telecoms has unveiled a strategic plan to potentially list its mobile subsidiary, Cell C, on the Johannesburg Stock Exchange (JSE) in a bid to revamp its financial structure. This move comes as a response to the ongoing financial challenges faced by Cell C in recent years.
The proposed restructuring involves a series of transactions aimed at enhancing Cell C’s financial sustainability and operational efficiency. One of the key highlights of the plan is the conversion of debt into equity. The Prepaid Company (TPC), a subsidiary of Blue Label, will transfer Cell C airtime from its balance sheet to Cell C in exchange for newly issued equity. Furthermore, TPC’s outstanding debt claims against Cell C will be converted into equity, thereby reducing Cell C’s leverage.
In addition, Cell C will acquire Comm Equipment Company (CEC), which is responsible for its postpaid offerings. This acquisition will allow Cell C to take full control of its postpaid customer base, including various operational aspects such as supply chain, marketing, billing, and collections.
The restructuring also involves realigning the ownership structures of special purpose vehicles (SPVs) holding equity interests in Cell C to match the revised capital framework. These steps are intended to streamline operations, improve financial sustainability, and position Cell C for long-term growth and potential listing on the JSE.
Blue Label’s decision to restructure Cell C comes after facing financial difficulties since acquiring a 45% stake in the company in 2017. Despite challenges, recent efforts such as adopting a capital-light approach to its mobile network and forming strategic partnerships have shown signs of operational and financial improvement.
The proposed listing and restructuring are pending approvals from the boards of Blue Label and Cell C, as well as consent from shareholders and regulatory bodies. If successful, the initiative will enable investors to independently evaluate the value and strategic direction of Blue Label’s distribution businesses and Cell C’s telecom operations. This strategic move signifies Blue Label’s commitment to unlocking shareholder value and positioning Cell C for future growth and success in the telecommunications sector.
