Blue Label Telecoms, Cell C’s largest shareholder, remains confident the mobile operator will be saved and get fresh funding, but will not commit to timelines as to when this will happen.
Cell C, which has been facing liquidity challenges, has been waiting for recapitalisation from shareholders for some time.
Blue Label previously promised new money to support the turnaround strategy being implemented by the telco’s management, but that is yet to happen.
In August last year, Blue Label said huge inroads in negotiating the funding deal had been made and it expected to conclude the discussions by the end of 2020, but that didn’t materialise.
Joint-CEOs Mark and Brett Levy presented the group’s latest financial performance in a virtual media briefing today, with Mark Levy saying he will not repeat giving timelines as to when Cell C will be recapitalised. However, he said the conclusion of the negotiations is close.
“The recap is looking good,” he noted, adding he was not willing to provide a deadline as he had done previously. “What I can tell you is that we really believe Cell C will be recapped in the near future, meaning in a short space of time.
“There are two agreements that need to be signed; one agreement is with the lenders and the other is the term sheet agreement of the new money, and as soon as they sign, we will make an announcement to the market. We are confident on the recap, as I mentioned the last time.”
Blue Label embarked on the recapitalisation almost two years ago to improve the company's capital structure and tackle Cell C’s R9 billion debt burden.
In the period under review, Blue Label says it continues to increase market share and bolster its product and services mix, as the core of its services were unaffected by the COVID-19 pandemic.
“The performance of the Blue Label Group remains resilient in an adverse economic environment. In spite of the COVID-19 pandemic, the group has continued to deliver essential services, including electricity, airtime, data and other digital services, as well as providing financial transactional services, which have not been negatively impacted.”
However, the group's ticketing and call centre operations have been negatively impacted as a result of the COVID-19 pandemic.
Blue Label says in the six months, cash flow generated by the group strengthened, with cash generated from operating activities amounting to R970 million.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) declined 6.1% to R703 million, which includes non-recurring income of R101 million, with R79 million of this related to the disposal of the group’s interest in Blue Label Mexico and R22 million to foreign-exchange effects.
Earnings per share and headline earnings per share increased from 34.83c and 39.98c per share in the comparative period to 49.92c and 40.96c per share, respectively, in the current period.
It says the increase in basic earnings per share was primarily attributable to the disposal of the group's 47.56% interest in Blue Label Mexico, as well as a positive movement from a negative contribution by the retail division of the WiConnect stores in the comparative period to a partial recoupment of losses in the current period.
Blue Label ceased the operations of the WiConnect retail stores in the prior financial year.
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