Blue Label Telecoms recently announced it is buying a 45% stake in Cell C for R5.5 billion, which will make it the largest shareholder in the mobile operator.
The proposed recapitalisation will reduce the net debt of Cell C to approximately R8 billion and enable the company to continue delivering on its growth strategy in a sustainable manner.
With more manageable debt, the mobile operator is expected to do far better financially – but there are questions about its loss-making legacy products and services.
Cell C has launched many aggressively-priced mobile products in recent years, raising the question as to whether these products are losing the company money.
Blue Label Telecoms joint-CEO Brett Levy, who looked at Cell C’s books before the proposed deal, told BusinessDay TV the mobile operator does not have many loss-making products.
He said a lot of cleaning up happened at Cell C under former CEO Alan Knott-Craig and his successor Jose dos Santos.
This improved Cell C’s financial situation and the company is now operating with a healthy EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation).