{"id":462951,"date":"2022-10-03T15:07:57","date_gmt":"2022-10-03T13:07:57","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=462951"},"modified":"2022-10-03T15:09:53","modified_gmt":"2022-10-03T13:09:53","slug":"cell-c-still-has-massive-financial-problems","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/investing\/462951-cell-c-still-has-massive-financial-problems.html","title":{"rendered":"Cell C still has massive financial problems"},"content":{"rendered":"

Cell C released its latest financial results last week, revealing that it remains technically insolvent<\/a><\/strong> following the Blue Label Telecoms recapitalisation deal.<\/p>\n

On 22 September, Blue Label concluded a deal to restructure and refinance Cell C and reduce its debt to give the mobile operator a healthier balance sheet.<\/p>\n

New money will also be injected into Cell C to stabilise the company and provide the needed liquidity to operate and grow its business.<\/p>\n

Cell C\u2019s secure lenders agreed to a huge reduction in outstanding debt. Those who wanted cash had to take an 80c haircut, while others stayed invested at 55c to the rand.<\/p>\n

Stakeholders were eagerly awaiting Cell C\u2019s financial results, which were released today following numerous delays.<\/p>\n

Of particular interest was what Cell C\u2019s balance sheet looked like after its debt restructuring.<\/p>\n

Cell C revealed that it remains technically insolvent post-recap, with its total liabilities exceeding its total assets by R6 billion.<\/p>\n

What it means, in simple terms, is that Cell C remains financially distressed and will have to perform well to avoid bankruptcy.<\/p>\n

Cell C\u2019s post-recapitalisation balance sheet is summarised below.<\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n
Assets and liabilities<\/strong><\/th>\nR billion<\/strong><\/th>\n<\/tr>\n<\/thead>\n
Non-current assets<\/td>\n3.097<\/td>\n<\/tr>\n
Current assets<\/td>\n3.107<\/td>\n<\/tr>\n
Total assets<\/strong><\/td>\n6.204<\/strong><\/td>\n<\/tr>\n
Non-current liabilities<\/td>\n(4.795)<\/td>\n<\/tr>\n
Current liabilities<\/td>\n(7.617)<\/td>\n<\/tr>\n
Total Liabilities<\/strong><\/td>\n(12.412)<\/strong><\/td>\n<\/tr>\n
Net equity<\/strong><\/td>\n(6.208)<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

For Cell C to dig itself out of this hole, it must generate significant profits to reduce debt or increase assets.<\/p>\n

However, its latest results showed that it moved from a net profit of R148 million in H1 2021 to a net loss of R2 billion in H1 2022.<\/p>\n

Part of the problem was operating expenditure which increased from R5.3 billion to R6.2 billion year on year.<\/p>\n

The operator\u2019s earnings before interest, taxes, depreciation and amortisation (EBITDA) also declined from R1.3 billion to R366 million.<\/p>\n

Cell C blamed the decline in profit and EBITDA on recapitalisation costs and liquidity support, but it does not adequately explain the challenges.<\/p>\n

Cell C saved money on lower capital expenditure and network expenses, which should have been seen in the latest finances.<\/p>\n

Another challenge for the operator is that its revenue and subscriber base continue to decline, which impacts service revenue.<\/p>\n

In its latest financial results, Cell C did not report service revenue \u2014 a mobile operator\u2019s primary measure of success.<\/p>\n

Between H1 2020 and H1 2021, its net service revenue declined from R6.54 billion to R6.16 billion. This trend most likely continued in 2022.<\/p>\n

Cell C also owes a significant amount of money to debtors like its landlord, Attacq.<\/p>\n

Attacq signed a new agreement with Cell C<\/a><\/strong>, which includes two bullet payments in December 2024 and December 2026 to cover the outstanding rent.<\/p>\n

Neither Cell C nor Attacq would comment on how much rent is owed and how much the bullet payments are that Cell C agreed to pay.<\/p>\n

Daily Investor asked Cell C about its financial challenges, but the company said time constraints prevented it from answering these questions.<\/p>\n

\n

This article was first published by Daily Investor<\/a><\/strong> and is republished with permission.<\/em><\/p>\n

Now read:\u00a0Auditors flag concerns about Cell C<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

Even after a protracted recapitalisation deal, Cell C remains technically insolvent \u2014\u00a0and not in a small way.<\/p>\n","protected":false},"author":341108,"featured_media":383998,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[80335],"tags":[1017,355,35],"class_list":["post-462951","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-blue-label-telecoms","tag-cell-c","tag-headline"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/462951"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341108"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=462951"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/462951\/revisions"}],"predecessor-version":[{"id":462953,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/462951\/revisions\/462953"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/383998"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=462951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=462951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=462951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}