Cell C makes R337-million loss

Cell C’s half-year revenue has declined 6.7% from R6.39 billion to R5.96 billion, Blue Label reported on Thursday.

However, acting chief financial officer El Kope said that this decline was due to an accounting treatment change for some parts of the business.

She said Cell C is now regarded as an agent rather than a principal for certain sales. When normalising for this, Cell C’s like-for-like revenue becomes R6.74 billion.

Blue Label also reported that for the six months ended 30 November 2023, Cell C posted a loss of R336.7 million.

This is a big swing from the R5.81 billion profit Cell C reported for the same period in 2022.

However, Blue Label co-CEO Mark Levy previously explained that last year’s net profit was a once-off due to the operator’s recapitalisation.

Levy explained that Cell C underwent a recapitalisation to deleverage its balance sheet and provide it with the needed liquidity to operate.

In Blue Label’s annual results for the year ended 30 June 2023, the company reported that Cell C made a profit of R4.63 billion.

Levy said this included extraneous income of R6.9 billion primarily related to the release of the debt in line with Cell C’s compromise to some of its lenders through the recapitalisation.

Excluding the recapitalisation, Cell C would therefore have made a loss of R2.45 billion.

In its latest interim results, Blue Label also reported that Cell C was responsible for a significant chunk of its finance income.

Blue Label’s finance income grew from R131 million to R352 million — a R221 million or 169% increase.

This breaks down as follows:

• R16 million attributable to interest received on cash resources
• R54 million to the loan provided to Cell C in connection with the Comms Equipment Company R1.1 billion deferral amount
• R273 million from the loan extended to Cell C as a component of the Debt Funding required as part of the recapitalisation transaction
• R9 million from other loans advanced