{"id":517527,"date":"2023-12-02T07:02:39","date_gmt":"2023-12-02T05:02:39","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=517527"},"modified":"2023-12-02T07:04:45","modified_gmt":"2023-12-02T05:04:45","slug":"cell-c-is-insolvent","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/investing\/517527-cell-c-is-insolvent.html","title":{"rendered":"Cell C is insolvent"},"content":{"rendered":"

Cell C released its latest financial results this week, which revealed that the mobile operator remains hopelessly insolvent despite the recapitalisation in September 2022.<\/p>\n

Cell C\u2019s balance sheet for its full year 2022 shows that it has assets of R5.798 billion and liabilities of R15.092 billion. It translates into negative equity of R9.294 billion.<\/p>\n

Simply put, it shows Cell C cannot honour its current liabilities, including its short-term borrowings, with its assets. This means Cell C is technically insolvent.<\/p>\n

It is striking that Cell C\u2019s liabilities are nearly three times higher than its assets. To turn this situation around will be exceedingly difficult.<\/p>\n

The full year 2022 results come after 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

Before the recapitalisation, all old bonds and debt were classified as short-term as the R9 billion debt was due.<\/p>\n

After the recapitalisation, the remaining R2.9 billion debt was denominated and classified appropriately, with the majority as long-term.<\/p>\n

Cell C\u2019s current liabilities decreased from R17.691 billion to R10.732 billion, which shows the impact of the recapitalisation.<\/p>\n

However, non-current liabilities increased by R1.1 billion due to an increase in contract liabilities and other payables.<\/p>\n

\u201cOverall negative equity improved year on year but remained negative on 31 Dec\u201922 and is expected to remain at these levels until the business turnaround is completed,\u201d Cell C said.<\/p>\n

The table below, which comes from Cell C\u2019s latest financial reporting, shows the mobile operator\u2019s balance sheet at the end of the 2022 financial year.<\/p>\n

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

Cell C remains upbeat<\/h2>\n

Despite significant challenges, Cell C remains upbeat about its prospects, saying its business stabilisation efforts are yielding improved results.<\/p>\n

Cell C said the business demonstrated resilience by maintaining revenue of R10.09 billion for the year-to-date to September 2023 versus R10.14 billion in 2022.<\/p>\n

The average blended revenue per user (ARPU) for Cell C\u2019s consumer base has increased from R74 in 2022 to R80 by the end of September.<\/p>\n

However, the number of subscribers plummeted to 8.2 million, down from 17.2 million five years ago.<\/p>\n

Cell C has lost millions of subscribers over the last two years which should be of concern to the mobile operator.<\/p>\n

Another challenge is Cell C\u2019s higher expenses. Direct expenses increased by 7% year on year, partly because of its network transition.<\/p>\n

The increase in roaming costs also had a direct impact on the gross margin, which also shows a reduction of 23%.<\/p>\n

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined by 509% due to revenue reduction.<\/p>\n

Cell C CEO Jorge Mendes expressed confidence in the operator\u2019s prospects and is focussing on changing company culture to drive growth.<\/p>\n

\u201cWith our newly formed management team, building a great culture, a fully operational network, and a robust strategy, Cell C is well-positioned to drive growth and profitability,\u201d he said.<\/p>\n

\u201cI am pleased that in the last quarter of 2023, we are seeing improved performance momentum.\u201d<\/p>\n

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

\n

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

Now read:\u00a0Cell C lost over 4.5 million customers in a year \u2014 on purpose<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

Cell C released its latest financial results, which revealed that the mobile operator remains hopelessly insolvent despite the recapitalisation in September 2022.<\/p>\n","protected":false},"author":341108,"featured_media":433544,"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":[355,35],"class_list":["post-517527","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-cell-c","tag-headline"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/517527"}],"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=517527"}],"version-history":[{"count":2,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/517527\/revisions"}],"predecessor-version":[{"id":518141,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/517527\/revisions\/518141"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/433544"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=517527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=517527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=517527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}