{"id":481567,"date":"2023-02-25T11:01:47","date_gmt":"2023-02-25T09:01:47","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=481567"},"modified":"2023-02-25T11:03:26","modified_gmt":"2023-02-25T09:03:26","slug":"cell-c-is-still-technically-insolvent","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/investing\/481567-cell-c-is-still-technically-insolvent.html","title":{"rendered":"Cell C is still technically insolvent"},"content":{"rendered":"

Blue Label Telecoms\u2019 interim results revealed a huge decrease in earnings partly due to its ongoing Cell C headaches.<\/p>\n

Blue Label\u2019s results for the six months ending November 2022 showed that its net profit per share decreased from 60.59 cents to -8.74 cents year-on-year.<\/p>\n

It translates to a net loss of R77 million to Blue Label, compared to the previous period\u2019s R531 million profit.<\/p>\n

Blue Label told shareholders that the large drop in profits was mainly due to the recapitalisation process of Cell C.<\/p>\n

In September 2022, Blue Label concluded a series of agreements with Cell C and its financial stakeholders to restructure and refinance the mobile operator.<\/p>\n

The deal included restructuring Cell C\u2019s large debt burden by settling creditors\u2019 claims at 20 cents to the rand.<\/p>\n

It also involved a new loan of R1.03 billion from The Prepaid Company (TPC), a wholly-owned subsidiary of Blue Label.<\/p>\n

Cell C weighed heavily on Blue Label since it first bought a stake in the operator in 2017, and investors eagerly awaited the latest result to assess the impact of the recapitalisation process.<\/p>\n

Cell C reported interim revenue of R6.4 billion for the period ended November 2022, 4% lower than the previous period\u2019s R6.68 billion.<\/p>\n

The downward trend in revenue from 2019 can be seen in the chart below:<\/p>\n

\"\"<\/a><\/p>\n

Cell C continues to struggle with solvency. Although it improved significantly after recapitalisation, the operator remains technically insolvent.<\/p>\n

A company is technically insolvent when it cannot settle all its liabilities if all its assets are liquidated.<\/p>\n

Cell C\u2019s assets decreased significantly after recapitalisation \u2013 from R21.16 billion in 2021 to R17.7 billion in November 2022.<\/p>\n

The encouraging news for investors is that Cell C\u2019s liabilities also significantly decreased, shrinking the gap between liabilities and assets.<\/p>\n

So while Cell C remains technically insolvent, with liabilities exceeding assets by R1.83 billion, it is on the right path.<\/p>\n

With less strain on the asset base because of a smaller debt burden, a good performance from Cell C can turn its equity positive.<\/p>\n

The charts below show Cell C\u2019s assets and liabilities, and equity over the last few years.<\/p>\n

\"\"<\/a><\/p>\n

\"\"<\/a><\/p>\n

\n

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

Now read:\u00a0Blue Label could take control of Cell C<\/a><\/h2>\n","protected":false},"excerpt":{"rendered":"

Blue Label Telecoms’ interim results revealed a huge decrease in earnings partly due to its ongoing Cell C headaches.<\/p>\n","protected":false},"author":341111,"featured_media":461928,"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":[1017,355,35,83101],"class_list":["post-481567","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-blue-label-telecoms","tag-cell-c","tag-headline","tag-the-prepaid-company-tpc"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/481567"}],"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\/341111"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=481567"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/481567\/revisions"}],"predecessor-version":[{"id":481575,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/481567\/revisions\/481575"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/461928"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=481567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=481567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=481567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}