JSE-listed Blue Label Telecoms has taken a major step forward with its investment in Cell C, reversing a multibillion-rand impairment it had previously recorded against its stake in the mobile operator. This move, which effectively restores the value of its investment on the company’s books, signals strong confidence in Cell C’s ongoing recovery and its potential for a future listing.
The impairment was first recorded in 2019 when Cell C faced significant financial difficulties. While a partial reversal occurred two years ago, Blue Label has now fully written back the remaining balance. This decision was driven by Cell C’s return to profitability in the current year, which is a key milestone in its turnaround efforts.
This accounting adjustment had a dramatic effect on Blue Label’s financial performance. For the year ended May 31, 2025, the company reported a more than sixfold increase in headline earnings, which surged to R4.1 billion. Core headline earnings, which exclude one-off items, also saw a substantial jump of 258% to R2.43 billion. The company’s net profit after tax soared to R2.5 billion, up from R647 million a year earlier.
The reversal of the R1.56 billion impairment was the primary driver of this boost, helping headline earnings per share climb to R4.56 from 74c in the previous year.
Beyond the financial reporting, this move is part of a larger strategic plan. Blue Label has indicated its intention to restructure its holdings with the goal of listing Cell C separately on the JSE as soon as 2026. This would allow investors to value the mobile operator as a standalone entity. A recent step in this direction is the integration of Comm Equipment Company into Cell C, which will consolidate the management of its post-paid customer base and supply chain.
For Blue Label, the reversal closes a challenging chapter of financial losses and sets a more optimistic tone for its investment. The market has reacted positively to these developments, with Blue Label’s share price jumping 172% since the beginning of the year as investors grow more confident in Cell C’s turnaround, led by former Vodacom executive Jorge Mendes.
Despite a 4% decrease in revenue to R14.1 billion, Blue Label’s overall turnover, including electricity, vouchers, and ticketing, increased by 7% to R96 billion. The company’s gross profit also rose by 2% to R3.38 billion, with margins expanding due to higher sales of Pinless top-ups and electricity. While Cell C’s ability to maintain profitability in South Africa’s highly competitive telecoms sector remains the ultimate test, Blue Label’s books now reflect a story of recovery and renewed potential.
