Cell C owner says it made R389 million profit despite reporting R5-billion loss

Blu Label Unlimited says that when you consider the impact that listing Cell C on the JSE had on its results, it made an after-tax net profit of R389 million and not a R5-billion loss as reported under IFRS standards.

“The group’s financial results for the six-month period ended 30 November 2025 were materially impacted by a series of strategic transactions,” Blu Label stated.

“Most notably, the acquisition of control of Cell C, the subsequent pre-listing restructuring, which included the disposal of Comm Equipment Company (CEC), and the partial disposal of Cell C.”

Following Cell C’s listing, Blu Label continues to hold a 49.47% direct stake in Cell C. This equity-accounted contribution will include CEC’s earnings following its integration into Cell C.

“Accordingly, the group’s normalised earnings will incorporate its proportionate share of Cell C’s profitability, which will be added to the core headline earnings base of R398 million,” said Blu Label.

“This is expected to provide a more comprehensive view of the Group’s total earnings while enhancing earnings visibility.”

These transactions, although strategically important, introduce a degree of accounting complexity that Blu Label said has created volatility in the group’s underlying performance.

“Although the related accounting treatments are required under IFRS Accounting Standards, they are not indicative of Blu Label’s core operational trajectory or earnings capacity,” the company said.

“Accordingly, in order to provide a clearer understanding of the group’s core performance, normalised financial information has been presented.”

This excludes Cell C’s and CEC’s financial results for the six months, a goodwill impairment, and all extraneous items associated with Cell C’s pre-listing restructuring.

“This approach provides an alternative basis from which to evaluate the group’s sustainable earnings profile and ongoing performance,” said Blu Label.

“The normalised financial information is not based on IFRS Accounting Standards and does not form part of the primary financial statements of the group.”

Blu Label explains R5.2-billion loss on Cell C

Blu Label explained that its reported R5-billion loss stems from a net loss of R5.2 billion on its Cell C investment, which is added back for headline earnings.

The loss comprises R6 billion recognised on the disposal of Blu Label subsidiary The Prepaid Company’s investment in Cell C and CEC following Cell C’s listing at a market value of R9 billion.

This R6-billion loss was partially offset by a R841-million gain on the remeasurement of the previously held interest when TPC acquired control of Cell C in September 2025.

Blu Label also noted that its reported revenue cannot be compared with that from several years ago due to changes in its business.

Traditional prepaid vouchers have been superseded by “PINless top-ups”, which the company says will cause its revenue to decline to more closely match its gross income.

“On inclusion of the gross amount generated on ‘PINless top-ups’, prepaid electricity, ticketing and universal vouchers, the effective revenue increase equated to 11% from R45.9 billion to R50.9 billion,” it said.

This is lower than its reported revenue growth of 19% from R7.25 billion to R8.64 billion, but also higher than the 31% year-on-year decline obtained when comparing its normalised revenue of R5.02 billion.

The Blu Label board resumed dividend distributions, declaring an interim dividend of 43.56 cents per share.

“This reflects confidence in the group’s financial position, cash generation and sustainable earnings outlook,” it said.

Summary of Blu Label’s normalised and reported results

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