Cell C explains missing R10 billion
Cell C says that different reporting standards explain the R10 billion difference in the assets on its balance sheet between its financial statements and those of Blue Label Telecoms.
Cell C’s unaudited financial results for the 12 months ended 31 May 2025 showed that its assets increased by 22% to R5.072 billion.
This was partly because the company recognised deferred tax assets in the current year as it returned to profitability.
Total liabilities increased by 8% to R13.379 billion. It said the reduction in the trade and other payables was offset by the increase in non-current shareholder debt.
Cell C explained that related party debt transactions account for approximately 60% of the total liabilities.
Blue Label Telecoms (now known as Blu Label Unlimited) also reported on Cell C’s balance sheet, which looked completely different from the mobile operator’s.
According to Blue Label, Cell C had R15.020 billion in assets and R16.065 billion in liabilities, a huge difference from what Cell C reported.
This means Cell C showed negative equity of R8.305 billion, while Blue Label showed negative equity of R1.044 billion.
This R7.261 billion difference is significant as it shows the market how difficult it would be for Cell C to reverse its technically insolvent status.
Since 2019, the Cell C total liabilities reported by Blue Label have consistently been higher than those reported by the mobile operator by at least R1.5 billion.
In the 2024 financial year, the difference between these two figures was R2.8 billion, and in the 2025 financial year, it was R2.7 billion.
The table below shows the difference between Cell C and Blue Label Telecoms’ financial reporting for the 2025 financial year.
| Measure | Cell C’s financial report | Blue Label’s financial report | Difference |
| Total Assets | R5.074 billion | R15.020 billion | R9.946 billion |
| Total Liabilities | R13.379 billion | R16.065 billion | R2.686 billion |
| Equity | -R8.305 billion | -R1.044 billion | R7.261 billion |
Cell C explains the difference
Cell C explained that the variance in its reporting and that of Blue Label primarily arises from IFRS 3 (business combinations) purchase price allocation (PPA).
These were independently valued at the time when Blue Label Telecoms acquired its initial 45% stake in Cell C in 2017.
The PPA recognised intangible assets, principally spectrum and brand, of R9.946 billion and related deferred tax liabilities of R2.68 billion on Blue Label’s books.
These adjustments reflect the fair value accounting treatment required under International Financial Reporting Standards (IFRS) for business combinations.
These fair value adjustments appear in Blue Label’s consolidated view as required for IFRS but not in Cell C’s standalone legal entity financials.
Cell C added that any valuation assumptions underpinning the fair value allocation were determined by Blue Label and its independent valuation processes.
Daily Investor’s chartered financial analyst, Drikus Greyling, confirmed that Cell C’s response sufficiently explains the difference between Cell C and Blue Label’s books.
He said that when Blue Label acquired Cell C, it was forced to fair value adjust the operator’s assets to comply with IFRS 3 purchase price allocation accounting.
Blue Label had to include intangible assets, such as Cell C’s spectrum, as identifiable assets that had to be fairly valued.
Spectrum is not in Cell C’s books because, under IAS 38, Cell C’s accounting method, an intangible asset can only be capitalised if it is identifiable, the company controls it, and its cost can reliably be measured.
The cost of spectrum cannot be reliably measured, so Cell C could not report this asset in its books.
Greyling added that the higher asset value within Blue Label’s books will cause it to report a lower profit value than the taxable profit for tax purposes due to higher amortisation expenses.
However, the higher amortisation expenses within Blue Label’s books will not be tax deductible, because SARS does not recognise the revalued assets.
This resulted in a higher deferred tax liability within Blue Label’s books than Cell C.
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