Cell C announces JSE listing

Cell C parent company Blue Label Unlimited (BLU) has announced its plan to list the mobile operator on the Johannesburg Stock Exchange.

This listing does not come as a surprise, as the company had notified shareholders and prospective investors about a possible listing earlier this year.

Prior to the listing, BLU embarked on yet another restructuring of the company which involved settling all Cell C’s debt and swapping it for equity.

When the dust settles, BLU subsidiary The Prepaid Company (TPC) will hold a significant majority of the shares in the company.

Some of these shares will be transferred to the Cell C executive team, such that they will collectively hold 4.5% of the company’s shares.

Together with the listing, The Prepaid Company will make an offer to sell shares intended to raise approximately R7.7 billion, including an overallotment option of about R500 million.

TPC’s offer will also include an allocation of shares of up to approximately R2.4 billion to an empowerment vehicle, referred to as the BEE SPV.

“TPC intends to utilise the proceeds it receives from the sale of shares to strategically enhance its financial position,” BLU label stated.

“The proceeds raised will be allocated towards settling certain interest-bearing borrowings and other debt obligations.”

Additionally, a portion of the funds will be earmarked for dividends to shareholders. Furthermore, the remaining excess proceeds will be directed towards meeting working capital requirements.

Cell C will not receive any proceeds from the sale of the shares by The Prepaid Company.

“Cell C and TPC are deeply committed to advancing South Africa’s transformation agenda through meaningful and sustainable Broad-Based Black Economic Empowerment (B-BBEE),” BLU stated.

BLU said it must also take steps to ensure it continues to meet its regulatory obligations to maintain a 30% shareholding by historically disadvantaged persons.

It explained that the BEE SPV will help ensure that the requisite B-BBEE ownership structure is in place at the time of listing.

“The offer is expected to include the overallotment option, which is customary for transactions of this nature, to facilitate stabilisation activities,” said BLU.

“The overallotment option will not exceed approximately 7% of the total offer size.”

BLU said the listing was subject to customary conditions for capital markets transactions of this nature, including the minimum free-float and shareholder spread requirements as prescribed by the JSE Listings Requirements.

“The decision to pursue a listing on the JSE marks a significant and exciting step in Cell C’s growth story,” said Jorge Mendes, Cell C chief executive officer.

Mendes said that while Cell Cis already owned by a listed entity and has operated within that framework, a separate listing will be big boost to the company.

“It will enable the group to streamline its balance sheet, reinforce its growth strategy and strengthen its competitive positioning of business segments,” said Mendes.

“The listing is expected to be an enabler of our strategy, as it will elevate the Cell C brand, enhance access to capital to sustain growth, instil public transparency and market discipline, and enhance the Group’s profile with all stakeholders.”

Listing planned since 2016

Blue Label has had plans to list Cell C since 2016, when former Cell C CEO Jose dos Santos said the company planned to list on the JSE in the next three to four years.

Dos Santos said in January 2016 that following the company’s recapitalisation, the following three years would be used to position it strongly for a favourable listing.

A month after Dos Santos made these remarks, Blue Label co-CEO Brett Levy said that listing Cell C was a good strategy. Levy said all big operators should list due to their liquidity on the market and their profile.

He said that a restructured Cell C offers compelling growth prospects, including listing three to four years down the line, sometime in 2019 or 2020.

However, this planned listing did not happen as the first recapitalisation did not improve Cell C’s financial situation enough to stabilise the company.

Blue Label had to orchestrate a second recapitalisation to further reduce Cell C’s debt in an attempt to turn the company around.

In August, Cell C announced that it reached profitability for the first time in the year ended 31 May 2025, achieved growth across key revenue lines, and improved operating margins compared with the prior year.

Blue Label Telecoms also reversed its impairment of Cell C and started recognising its share of the mobile operator’s profits and losses. However, Cell C remains technically insolvent.

Blue Label stopped recognising Cell C’s share of profits and losses in 2019 after impairing its investment in the mobile operator to nil.

The impairment came after Blue Label took significant pain following its acquisition of Cell C, including the operator reporting an R8 billion loss in the financial year ended 31 May 2019.

Blue Label acquired a 45% stake in Cell C in 2017 as part of a deal to recapitalise the company when it was buckling under the weight of huge foreign-currency loans.

Following a second recapitalisation in 2022 and several additional transactions in recent years, Blue Label’s economic interest in Cell C now stands at 70% as of 31 May 2025.

Blue Label explained in previous years that it would resume recognising Cell C’s share of profits only after its share of the profits equals the share of accumulated losses not recognised. This has now happened.

However, in its financial statements for the year ended 31 May 2025, Blue Label reported that Cell C had assets worth R15 billion, while its liabilities were close to R16.1 billion.

This represents a substantial improvement in Cell C’s negative equity position since last year, when it stood close to R3.2 billion.

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