Blue Label eyes Cell C listing

Blue Label is considering a restructuring that could see it list telecommunications company Cell C on the JSE.

In an announcement to the market on Friday, 16 May, Blue Label said it is considering various strategic options and initiatives to unlock and deliver value to its shareholders.

Specifically, the company is exploring a potential restructuring of the group, which it believes will assist in facilitating a separation and potential future listing of Cell C on the prime segment of the JSE’s Main Board.

“The proposed restructure is expected to encompass various ancillary transactions, aimed at optimising Cell C’s capital structure and balance sheet in preparation for a potential separation and future listing on the JSE,” the company said. 

“Should Blue Label elect to implement the proposed restructuring, it is envisaged that the various restructuring steps will be inter-conditional and contingent upon the potential listing of Cell C.” 

This proposed restructuring will need to be approved by Cell C and Blue Label’s boards, as well as the company’s shareholders.

Blue Label explained that this proposed restructuring is expected to deliver significant benefits for the company and its shareholders.

In particular, it said the separation and potential future listing of Cell C from Blue Label’s existing distribution businesses would allow investors to independently assess each business’s value and strategic focus.

Key components of the proposed restructuring would include –

• Airtime asset transfer: The Prepaid Company (TPC), one of Blue Label’s subsidiaries that holds shares and debt claims in Cell C, will transfer the Cell C airtime it currently holds on its balance sheet to Cell C in exchange for newly issued additional equity in Cell C.
• Debt-to-equity conversion: TPC’s outstanding debt claims against Cell C will be capitalised and converted into equity, further reducing Cell C’s leverage.
• Acquisition of Comm Equipment Company (CEC): Cell C will acquire 100% of CEC, another of Blue Label’s subsidiaries, from TPC in exchange for additional Cell C shares. CEC is a subsidiary responsible for Cell C’s postpaid offerings. 
• The internalisation will enable Cell C to assume full responsibility over its postpaid customer base, including supply chain oversight, commercial operations, marketing, billing, credit, and collections.
• SPV restructure: The Special Purpose Vehicles currently holding equity interests in Cell C will also be restructured as part of the broader initiative, aligning their ownership structures with the redefined capital framework. 

“Overall, the restructure is intended to streamline operations, improve financial sustainability, and enhance Cell C’s strategic readiness for long-term growth and potential listing,” the company said.

Blue Label explained that, over the past two years, the strengthened Cell C executive management team has been able to successfully return the Cell C business to a strong growth trajectory.

It said the business has shown significant improvement in operational and financial metrics, driving Cell C’s sustainable growth and profitability going forward.

“Cell C has taken a capital-light approach to its mobile network, utilising its own spectrum assets in combination with physical network infrastructure owned by other mobile network operators,” it said. 

“Going forward, Cell C will leverage the flexibility that comes with its capital-light model and the ability to roam across partner networks and will invest further to enhance customer offerings and experience.”