Cell C is technically insolvent – but there are positive signs
Cell C released its Annual Financial Statements for the 2024 financial year, revealing that it remained technically insolvent.
Cell C’s revenue declined from R11.9 billion to R11.3 billion, and the company swung from a R4.9 billion profit before tax to a R22 million loss before tax.
The mobile operator is currently implementing a turnaround plan to ensure it becomes solvent and grows revenue.
Cell C appointed former Vodacom executive Jorge Mendes as its new chief executive in July 2023 as part of a renewal process.
Mendes built a new management team, which included many former Vodacom executives which he knew well.
In January 2024, Cell C unveiled its new turnaround plan, aiming to reclaim its position as the country’s third-largest telecommunications company from Telkom.
“We are not in the clear yet. We have been recapitalised twice now. Our balance sheet still looks like a crime scene,” Mendes said.
The latest recapitalisation included a R1.46 billion loan from Blue Label to Cell C, which was used to repay Cell C lenders. The lenders received only 20% of their claimed loans.
Mendes strongly focuses on attracting and retaining skilled employees as part of the mobile operator’s turnaround.
“I want to have the best corporate culture in the country. I want staff retention and not staff attrition,” he said.
Mendes was confident that key performance indicators and metrics such as revenue, profit, and profit margin would improve due to the retention of talent and a good work environment.
“Profits will come as a result of the underlying culture and philosophy at Cell C,” Mendes said in January.
On 15 August 2024, Cell C unveiled a “brand refresh” that revealed the company’s new logo and brand identity.
Cell C chief marketing officer Melanie Forbes said the rebranding would help consumers consider the mobile operator when buying mobile products.
“We have millions of South Africans who have remained loyal to the brand, and we want to honour the legacy that has kept Cell C in the Top 30 South African brands,” she said.
Cell C’s latest results
All eyes were on Cell C’s latest results to assess its performance and see whether there have been improvements.
Cell C’s revenue declined from R11.85 billion to R11.28 billion during the last financial year, from 1 June 2023 to 31 May 2024.
Net profit before taxation declined from a R4.9 billion profit in 2023 to a R22 million loss before tax in 2024.
It should be noted that Cell C’s net profit after taxation of R4.63 billion in 2023 included extraneous income of R6.90 billion related to the recapitalisation transaction’s effects.
The extraneous income was predominantly related to debt release, and secured lenders accepted 20c to the rand as part of the recapitalisation.
Cell C recorded a loss of R2.30 billion for the year when the extraneous income was excluded.
The mobile operator remained technically insolvent. Its liabilities of R17.3 billion exceeded its assets of R14.1 billion.
However, the balance sheet looked a little better. Its negative equity of R3.2 billion was much lower than the R4.0 billion last year.
That shows that Cell C is progressing in cleaning up its balance sheet and is on a path to becoming solvent.
The table below summarises Cell C’s financial performance between 1 June 2023 to 31 May 2024.
| Measure (in ‘000) | 2023 Financial Year | 2024 Financial Year | Change |
| Revenue | R11,853,745 | R11,275,356 | -5% |
| Profit before tax | R4924453 | -R22,445 | -100% |
| Profit after tax | R4,630,809 | R279,479 | -94% |
| Balance Sheet | 2023 Financial Year | 2024 Financial Year | Change |
| Assets | R15,015,348 | R14,130,474 | -6% |
| Liabilities | R19,062,489 | R17,309,515 | -9% |
| Negative equity | R4,047,141 | R3,179,041 | –21% |
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