Blue Label Telecoms, majority shareholder in Cell C, yesterday sought to reassure investors after the mobile operator’s interim CEO Douglas Craigie Stevenson issued an open letter outlining the challenges the company is confronted with.
The news weighed on Blue Label shares, as a weak outlook provided by management rattled investors and the market. Nonetheless, the company is upbeat on the future and sees a silver lining as “management and the board are ensuring Cell C is sufficiently geared to run the business as required”.’
Blue Label refuted speculation of trouble at Cell C, claiming “no material concerns or issues have been uncovered as a result of Cell C’s new management conducting a deep dive into the business practices of Cell C in a drive for efficiencies. This is an ongoing process and shareholders will be updated as progress is made.”
In a SENS statement, the company says: “In anticipation of the transaction resolving the liquidity position at Cell C, and launching the new, improved operating model, Cell C’s management and board are ensuring Cell C is sufficiently geared to run the business as required.
“Blue Label and the Buffet Consortium are fully apprised of Cell C’s drive to effectively and efficiently utilise all of its network, technology and human capital assets, and are supportive of management’s initiatives.”
In his letter, Craigie Stevenson says there is an acknowledgement that the company faces, and continues to face, financial and other challenges.
Craigie Stevenson was named interim group chief executive officer of the company, effective 1 March, following the departure of Jose Dos Santos.
In August 2017, Blue Label completed Cell C's recapitalisation through a R5.5 billion investment, as well as a further subscription of shares from Net1 UEPS Technologies for R2 billion.
Blue Label holds a 45% stake in Cell C, Net1 owns 15%, and 10% is held on behalf of Cell C management and staff. 3C Telecommunications' shareholding is 30%.
Cell C has been under pressure for some time, facing myriad problems, including job stoppages, declining revenue and debt management challenges.
In February, Blue Label announced Cell C’s unaudited results for the year ended 31 December 2018, reflecting a R638 million loss.
Two weeks ago, the operator was downgraded by a global rating agency.
Standard & Poor’s downgraded Cell C’s debt rating further after the operator renegotiated terms of its R1.4 billion debt.
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