Cell C reports a loss of R337-million

Blue Label announced on Thursday a 6.7% drop in half-year revenue for Cell C, from R6.39 billion to R5.96 billion. This decline, according to acting CFO El Kope, is attributed to a change in the accounting treatment for certain sales where Cell C is now considered an agent rather than a principal. Considering this adjustment, the like-for-like revenue for Cell C stands at R6.74 billion.

Blue Label also disclosed that Cell C had a loss of R336.7 million for the six months ending on November 30, 2023. This is a sharp drop off from the profit of R5.81 billion reported in the same period of 2022. According to Blue Label co-CEO Mark Levy, however, last year’s profit was purely a one-off resulting from the recapitalization of the operator.

Levy elaborated that the recapitalization was designed to reduce the company’s debt and provide necessary operational liquidity. The profit of R4.63 billion that Blue Label reported in the year ended June 30, 2023, included an extraneous income of R6.9 billion because of the debt release associated with Cell C’s compromise with some lenders during the recapitalization. Without this recapitalization, Cell C would have reported a loss of R2.45 billion.

Blue Label’s recent interim results note that Cell C is responsible for a substantial part of its finance income, which increased by 169% from R131 million to R352 million. This finance income increase is mainly due to the loans provided to Cell C, along with interest on cash resources and other advanced loans.