Cell C has revealed it made a loss of R2.30 billion for the year ended 31 May 2023, when the extraneous income is excluded.
Blue Label Telecoms published its annual financial statements for the 2023 financial year last week, which included Cell C’s latest results.
These statements showed that Cell C swung from a R2.4 billion loss to a R4.9 billion profit over the last financial year.
The significant profit increase was striking as Cell C’s revenue declined from R13.3 billion to R11.9 billion over the same period.
Blue Label co-CEO Mark Levy explained Cell C’s recapitalisation transaction in September 2022 greatly influenced its reported profit.
The recapitalisation deleveraged the mobile operator’s balance sheet and gave Cell C the needed liquidity to operate and grow its business.
Levy said Cell C’s reported net profit after taxation of R4.63 billion included extraneous income of R6.9 billion.
The extraneous income was primarily related to the release of the debt in line with Cell C’s compromise to some of its secured lenders.
These lenders accepted an 80% haircut on their debt, which, in turn, bolstered Cell C’s income statement and helped it swing from a loss to a profit.
Cell C told Daily Investor that when the extraneous income is excluded, its losses for the year were R2.30 billion.
It should be noted that Cell C’s R2.30 billion loss may be overstated because of costs related to the recapitalisation transaction.
Blue Label’s share of Cell C’s losses amounted to R1.27 billion. The company’s report states that Blue Label has a 49.53% shareholding in Cell C, with a “total economic interest” of 63.19%.
Blue Label co-CEO Brett Levy recently said they agreed to acquire control of Cell C and make it a subsidiary of Blue Label Telecoms.