Struggling mobile phone operator Cell C, which destroyed shareholder value for JSE-listed firm Blue Label Telecoms, on Monday reported a R4 billion operating loss for the six months to 31 December 2019.
Strangely, Cell C CEO Douglas Craigie Stevenson believes the green shoots of the turnaround strategy, which was implemented from March 2019 onwards, are now visible.
The company’s full-year operating loss came in at R3.94 billion versus R7.36 billion loss in 2018.
The company attributed the improvement to operational improvements and right-sizing.
The group revenue was down to R15.2 billion versus R15.7 billion in 2018.
The company also lost 2.9 million prepaid customers.
Despite a drop in revenue, customer acquisitions and a R4 billion operating loss, Craigie Stevenson said that Cell C is now an operationally sound business that is financially viable and competitive.
Cell C is 45% owned by JSE-listed Blue Label Telecoms, 15% by Net 1, 3 Special Purpose Vehicles (SPVs) collectively hold 30% (in turn held by 3C Telecommunications and further in turn held as 29.4% by the Employee Believe Trust, 45.6% by Oger Telecoms and 25% by broad-based black empowerment grouping CellSAf); and Cell C Management and Staff hold 10%.
Net 1 and Blue Label Telecoms have written down to zero the value of their stake of the embattled mobile network, Cell C, which recently reported an R8 billion loss in the year to June, hit by impairments.
The mobile phone company is under increasing pressure on its liquidity due to its high level of debt and the associated servicing costs.
During the third quarter of fiscal 2019, Cell C signed a term sheet with the Buffet consortium, but the implementation of this capitalization has been delayed.
“The business performance allows for a successful recapitalisation to take place with a sustainable debt profile. We are optimistic that the hard work of fixing the operations prepares us to conclude the recapitalisation and to continue to be a customer champion delivering innovative service offerings,” said Craigie Stevenson.