Blue Label delisting considered

Blue Label Telecoms co-CEO Mark Levy said delisting the company from the JSE will be considered if it makes sense for shareholders.

Blue Label was founded by Mark and Brett Levy in 2001 and debuted in the telecommunications sector on the main board of the JSE on 14 November 2007.

The company’s share price showed strong growth over the next decade, with its market cap exceeding R19 billion in 2016.

In August 2017, Blue Label signed its biggest deal ever by acquiring 45% of Cell C in a large recapitalisation and turnaround plan.

Cell C became a significant drag on Blue Label and plummeted the share price to under R2 per share during the pandemic.

It recovered to over R7 per share by August 2022, but continued concerns around Cell C dragged it down to below R3 by September 2023.

Speaking to Techcentral, Brett Levy said the Blue Label share price is definitely undervalued at current levels.

“The value is definitely not what we trade at. I think it is totally undervalued at these levels,” Brett Levy said.

Levy admitted that it is difficult to put a value on the share price because of the uncertainty around Cell C.

“Does Cell C need more money? Will there be a cash call on Blue Label? Will investors need to put in more money?” are all questions which concern the market.

This makes it difficult for Blue Label to convince the market that the company offers good value at current levels.

With Blue Label feeling that its shares are undervalued, it is a perfect time to launch a share repurchase programme.

Apart from lifting the share price and creating shareholder value, it will also serve as an expression of confidence by Blue Label’s management team.

However, Mark Levy explained that the banks are restricting them from buying back shares as they want their money first.

“The most accretive thing we can do for any shareholder is to buy back our shares. When you are trading at a one, two, or three multiples, it is almost embarrassing,” he said.

With challenges around a share repurchase programme, some commentators have questioned whether it is time to take the company private.

Commenting on a possible delisting, Mark Levy said it does get to a stage in life where, if there is no value sitting where you are, you have to look at alternatives.

He explained that one would have to evaluate what the best shareholder returns are. “If it made sense for shareholders to get a return by delisting from the market, so be it,” he said.

Delisting Blue Label would be a board decision and not one that could be taken by the co-CEOs, Brett and Mark Levy, who own around 20% of the company.

“We sit on the board and have two votes. 80% of Blue Label’s shares are held by other people,” Levy said.

“Our board is vigilant and unemotional, and it would do what is best for shareholders. We would follow their guidance.”