Cell C is bleeding money, pushing Blue Label deep into the red

Cell C is pushing to grow market share in SA. (Duncan Alfreds, Fin24)
Cell C is pushing to grow market share in SA. (Duncan Alfreds, Fin24)

Blue Label Telecoms [JSE: BLU] gave a preview of its long-awaited results on Thursday. 

Earlier this week, the JSE threatened to suspend the company’s shares because it has not yet released its results for the year to end-May. The JSE set a final deadline of September 30.

On Thursday, the company warned that it would report a headline loss of up to 314c a share – from a profit of 115c the previous year.

While its core business – including providing airtime, data starter pack and prepaid electricity services – remains profitable, its 45% stake in Cell C took a heavy toll.

Cell C's trading losses and write-offs equalled a 287.65c headline loss per Blue Label’s share. Blue Label also reported losses from GloCell (which took over MTN, Vodacom and Cell C contract subscribers from Altech Autopage when it closed down), the Indian payment solution group Oxigen India as well as some of its other investments.

Excluding these investments, the group core headline earnings amounted to between R885m and R922m, compared to R716m last year.  

The debt-laden Cell C is struggling, with MTN recently writing off R211m in unpaid debt from Cell C. Cell C is cutting costs and implemented a hiring freeze. On top of that, the company is also investigating its employees for irregular business practices.

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