Cell C a big drag on Blue Label earnings

August 24, 2023 Siyabonga Mtangana

Blue Label Telecoms cautioned shareholders on Thursday that Cell C will drag down its earnings for the year ended 31 May 2023.

The JSE-listed technology, telecommunications and fintech company said headline earnings per share could tumble by as much as 66% as a result, largely, of the Cell C recapitalisation. Blue Label is Cell C’s largest shareholder, with a 49% shareholding. Blue Label has said previously that it may move soon to take a controlling stake in the business.

Blue Label’s core business, meanwhile, excluding “extraneous contributions and non-recurring income from the current and prior years”, continues to perform well, with earnings per share and headline EPS expected to increase by 8% and 9%, respectively, for the full year.

“The core businesses of the Blue Label group have consistently demonstrated growth in revenue, gross profit and core headline earnings per share for the year ended 31 May 2023. Excluding the extraneous contributions of R523-million in the current year and the non-recurring income of R214-million in the prior year, core headline earnings increased by R78-million (9%) from R847-million to R925-million.

Blue Label shares fell more than 5% on Thursday on the back of the trading update. At R3.30 apiece, they’re near their 52-week low, and have lost more than half their value in the past year.