{"id":619589,"date":"2025-11-21T13:49:02","date_gmt":"2025-11-21T11:49:02","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=619589"},"modified":"2025-11-28T10:16:05","modified_gmt":"2025-11-28T08:16:05","slug":"cell-c-already-takes-pain","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cellular\/619589-cell-c-already-takes-pain.html","title":{"rendered":"Cell C kisses R3 billion goodbye"},"content":{"rendered":"\n

Cell C has announced that it will launch at R26.50 per share, between R3 and R9 per share lower than it initially planned to.<\/p>\n\n\n\n

This also cuts the company\u2019s market capitalisation following its initial public offering from R10\u2013R12 billion to R9 billion \u2014 more than R3 billion less than it hoped to raise at the top end of its offer.<\/p>\n\n\n\n

The company announced its final IPO share price in a statement on the JSE News Service on Friday, 21 November 2025.<\/p>\n\n\n\n

\u201cFollowing the ongoing bookbuild process, Blu Label Unlimited approved a final Offer Price of R26.50 per offer share,\u201d it stated.<\/p>\n\n\n\n

Blu Label is Cell C\u2019s majority shareholder and owns close to 95% of the company following a significant restructuring ahead of the listing.<\/p>\n\n\n\n

Cell C and BLU subsidiary The Prepaid Company (TPC) initially targeted gross proceeds of up to R6.5 billion from the sale of shares, including an overallotment of R338 million.<\/p>\n\n\n\n

However, this has also now changed. \u201cAs noted in the pre-listing statement, the offer also included an overallotment option,\u201d Cell C stated.<\/p>\n\n\n\n

\u201cThis was granted by the selling shareholder to the stabilisation manager to purchase up to 9,520,000 overallotment shares.\u201d<\/p>\n\n\n\n

This was with the purpose of covering short positions for ordinary shares overalloted in the offer. \u201cIt is no longer intended to overallot any ordinary shares in the offer,\u201d Cell C said.<\/p>\n\n\n\n

The offer also includes an allocation of up to 68 million shares to a new empowerment ownership structure, with approximately R2.4 billion worth of shares earmarked for the vehicle.<\/p>\n\n\n\n

Cell C\u2019s presentation stated that the proceeds would be used to settle certain interest-bearing borrowings and other debt obligations.<\/p>\n\n\n\n

\u201cAdditionally, a portion of the funds will be earmarked for dividends to shareholders, reflecting BLU\u2019s commitment to delivering value to its investors,\u201d it said.<\/p>\n\n\n\n

The IPO comprises up to 173.4 million ordinary shares, alongside an additional 9.52 million shares available through an overallotment option.<\/p>\n\n\n\n

This collectively represents up to 53.8% of Cell C\u2019s issued share capital post-listing, with 340 million ordinary shares in issue at the time of admission.<\/p>\n\n\n\n

No love for Cell C<\/h2>\n\n\n\n
\"\"
Mark and Brett Levy, Blu Label co-founders and CEOs<\/figcaption><\/figure>\n\n\n\n

Many top analysts have expressed doubt about Cell C\u2019s prospects, given the local telecommunications environment and its market position.<\/p>\n\n\n\n

Capicraft Investment Partners CEO and portfolio manager Drikus Combrinck said the South African mobile market is highly competitive.<\/p>\n\n\n\n

He pointed to MTN and Vodacom\u2019s recent results, which showed that their local operations are under pressure.<\/p>\n\n\n\n

Another challenge is that Cell C is beholden to MTN and Vodacom to use their network infrastructure, which can result in margin pressure.<\/p>\n\n\n\n

Benguela Global Fund Managers CIO and co-founder Zwelakhe Mnguni shared Combrinck\u2019s view on Cell C.<\/p>\n\n\n\n

\u201cI am cautious about Cell C\u2019s growth momentum after the listing. To achieve growth in the highly competitive local telecommunications market is difficult,\u201d he said.<\/p>\n\n\n\n

Sasfin Securities\u2019 David Shapiro said he does not like the South African telecommunications industry as an investment sector.<\/p>\n\n\n\n

\u201cIt is far too competitive. As soon as you gain customers, you can lose them when a lower-priced offer comes to the market,\u201d he said.<\/p>\n\n\n\n

PSG\u2019s Schalk Louw shared Shapiro\u2019s opinion, stating that with Vodacom, MTN, Rain, Telkom, and Cell C competing for customers, it is challenging.<\/p>\n\n\n\n

\u201cMany telecommunications players are competing in a tough market environment. It is not easy,\u201d Louw said.<\/p>\n\n\n\n

However, SouthernCross Capital CIO and portfolio manager Cobus Potgieter has a different view.<\/p>\n\n\n\n

He said he was excited about Cell C\u2019s listing. \u201cIt is good to see the turnaround play come to market,\u201d he said.<\/p>\n\n\n\n

\u201cI have liked Cell C inside of Blu Label Unlimited for the past year. It was clear that its MVNO strategy is a great business model,\u201d he said.<\/p>\n\n\n\n

He highlighted the successful launch of Capitec\u2019s mobile product, where Cell C serves as its backend MVNO provider.<\/p>\n\n\n\n

Potgieter pointed out that he will still need to properly examine the finances and valuation before deciding whether to invest in the company.<\/p>\n\n\n\n

In addition to lowering its initial share price, Cell C also announced that the bookbuilding period for the offer will be extended until 16:00 on Friday, 21 November 2025.<\/p>\n\n\n\n

\u201cThis extension provides investors with additional time to consider the final offer price as part of their investment decisions,\u201d it said.<\/p>\n\n\n\n

Cell C financials as at 31 May 2025<\/h2>\n\n\n\n
Cell C financials \u2014 31 May 2025<\/th><\/tr>
Element<\/th>31 May 2025<\/th>31 May 2024<\/th><\/tr><\/thead>
Assets<\/strong><\/td>R15.02 billion<\/td>R14.1 billion<\/td><\/tr>
Liabilities<\/strong><\/td>R16.06 billion<\/td>R17.3 billion<\/td><\/tr>
Negative equity<\/strong><\/td>-R1.04 billion<\/td>-R3.18 billion<\/td><\/tr>
<\/td><\/td><\/td><\/tr>
Revenue<\/strong><\/td>R11.1 billion<\/td>R10.7 billion<\/td><\/tr>
Before-tax profit\/loss<\/strong><\/td>R264.4 million<\/td>-R22.4 million<\/td><\/tr>
After-tax profit<\/strong><\/td>R2.19 billion<\/td>R279.5 million<\/td><\/tr>
Blue Label\u2019s share of profits<\/strong><\/td>R1.51 billion<\/td>R176.6 million<\/td><\/tr>
Reverse 2019 impairment<\/strong><\/td>(R1.61 billion)<\/td>\u2014<\/td><\/tr>
Net Blue Label share of losses<\/strong><\/td>-R98.7 million<\/td>\u2014<\/td><\/tr>
Blue Label recognised deferred tax of R2.03 billion, boosting Cell C\u2019s after-tax profit.<\/em><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Cell C has slashed its share price during its initial public offering, reducing its post-IPO market capitalisation.<\/p>\n","protected":false},"author":15,"featured_media":555893,"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":[14,80335],"tags":[100568,355],"class_list":["post-619589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cellular","category-investing","tag-blu-label-unlimited-blu","tag-cell-c"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/619589"}],"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\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=619589"}],"version-history":[{"count":3,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/619589\/revisions"}],"predecessor-version":[{"id":620669,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/619589\/revisions\/620669"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/555893"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=619589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=619589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=619589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}