Blue Label Telecoms co-CEO Brett Levy said on Wednesday that the long-awaited recapitalisation of debt-laden mobile operator Cell C will be completed by no later than May this year.
The long-running process, which has taken years of intricate negotiation, is nearing its conclusion, with the money now secured and all stakeholders in alignment, Levy said.
Cell C has north of R21-billion in current liabilities on its balance sheet.
Blue Label said on Thursday that Cell C reported a net loss of R832-million in the six-month period ended 30 November 2021 on revenue of R6.7-billion. It said, however, that Cell C’s earnings before interest and tax “remain in line with strategy”. The operator enjoyed a 4% increase in prepaid subscribers, driven by “exponential growth” in prepaid broadband users. Cell C will report its full-year results to 31 December 2021 in April.To get all these parties to sing from the same hymn sheet took years of negotiation
Blue Label, which owns its 45% stake in Cell C through subsidiary The Prepaid Company, continues to attach a nil carrying value to the mobile operator. It originally paid R5.5-billion for the stake, which the company has conceded was a mistake. Investors have punished it for this, and its shares remain in the doldrums at about R5 a piece — a far cry from their peak above R20 in 2016.
Levy said the difficulty in reaching agreement on the recap for Cell C is that there were simply so many parties involved in the discussions: Chinese equipment companies (Huawei and ZTE); Chinese banks (Industrial and Commercial Bank of China and China Development Bank); South African banks (Nedbank and the Development Bank of Southern Africa); and bondholders from all over the world, including Lebanon and the US.
“To get all these parties to sing from the same hymn sheet took years of negotiation,” Levy said. “Everyone comes with a different angle.”
The “good news”, he said, is that “we are not fighting anymore. Everyone has agreed on the principle of the deal. Now it’s time to get pen to paper and get it signed – it’s really now about the legalities and how we put pen to paper.”
With Cell C expected to take part in communications regulator Icasa’s auction of spectrum for mobile broadband services in South Africa next month, one question is whether the company will have the financial means to pay for spectrum it bids for – bids at the auction could run into hundreds of millions if not billions of rand.
“The money will be available for Cell C for any spectrum that comes its way,” Levy said. “Where that money comes from, it’s too early to indicate, but we are absolutely part of the auction and we are expecting to get our piece of the spectrum.”