• Blue Label, which has written off its investment in Cell C, reported a 5% decline in revenue in 2022.
  • Cell C made a net loss before tax of 2.3 billion rand.
  • Cell C’s debt restructuring plan of more than 7 billion rand is expected to be completed by mid-September.
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Blue Label Telecoms, a major shareholder in Cell C, saw revenue fall 5% to 17.8 billion rand in the year to the end of May.

Cell C’s revenue fell from 13.9 billion rand at the end of May 2021 to 13.4 billion rand this year, while it posted a net loss before tax of 2.3 billion rand.

Blue Label also provides retailers with a range of services such as prepaid merchants, including SIM starter packs, prepaid airtime and event ticketing.

Its underlying earnings came in at 1 billion rand, or 121.01 cents per share, compared with 89.65 cents per share in the corresponding period in 2021. Gross profit increased by 548 million rand to 2.93 billion rand.

Net commissions received from the distribution of prepaid electricity increased by 18 million rubles to 298 million rubles.

The company said it continues to “increase market share and strengthen its product and service mix to protect and grow its market position.”

As a result of the financial problems faced by Cell C, Blue Label wrote down the book value of its 45% stake in the telecommunications company. In 2017, the company paid 5.5 billion rand for the stake. Cell C is struggling with a debt burden of 7.3 billion rand.

Cell C’s long-delayed recapitalization is expected to be completed by mid-September. Blue Label said the business is still considered a going concern.

The current financial statements received a qualified audit opinion due to “the inability to obtain sufficient appropriate audit evidence to support the use of the going concern assumption” for Cell C – as the recapitalization and restructuring of operations is still ongoing.

The company emphasized that the matter does not affect its financial statements due to the fact that the investment in Cell C was fully impaired in previous periods.

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