Blue Label shares tank on Cell C results

Shares in Blue Label Telecoms, which owns 45% of Cell C, fell by more than 7% on Tuesday morning after the mobile operator reported half-year results to 30 June 2018 that showed a net loss after tax of R645-million.

Blue Label fell to R7.75/share shortly after 10am in Johannesburg, a decline of 7.4% from Monday’s closing price, bringing its decline since the start of the year to about 50%. The share is trading at levels last seen five years ago.

Despite an improved operational performance — the net loss after tax was 33% less than the same period a year ago — Cell C continues to labour with high levels of debt on its balance sheet, even after its recent restructuring and recapitalisation.

Cell C’s service revenue was R6.9-billion, up 11%. Total revenue rose 5% to R7.8-billion. Data revenues improved by 20%, and the (still small) fibre-to-the-home business showed impressive gains.

Following Cell C’s recapitalisation, its long-term debt was R6.4-billion at the end of June, down from R17.9-billion a year ago. However, short-term debt rose to R1.5-billion from R417-million previously. Debt related to leases was R5.5-billion, up from R5.1-billion. Net debt including leases was R12.7-billion, down from R23.3-billion. Total interest payments in the half-year amounted to R952-million (previously R1.1-billion).

Cell C raised a new rand-denominated debt facility of R1.4-billion following its half-year results and said it is in the process of raising another R1.4-billion in vendor financing and a further R1-billion in “shareholder support”. It’s not immediately clear what form this shareholder support will take. TechCentral has asked both companies for further detail.

Blue Label will publish its full-year results to 31 May 2018 on Wednesday.  — (c) 2018 NewsCentral Media