Cell C continues to crush Blue Label

Blue Label Telecoms’ trading statement for the six months ended 30 November 2022 said that the company expects a big decrease in earnings per share.

Blue Label said the large decrease in profits resulted mainly from the recapitalisation of Cell C.

These included “other costs” incurred and a loss on reclassifying trade receivables from Cell C as a loan to an associate.

Blue Label also recapitalised previous impairments of its Cell C investment due to a portion of its losses not being guaranteed.

In 2022, Blue Label announced that it would be conducting a recapitalisation of Cell C to lower its debt burden of R7.3 billion to its lenders.

The recapitalisation included a R1.46 billion loan from Blue Label to Cell C, which would be used to repay Cell C lenders, offering them only 20% of their claimed loans.

Blue Label said in a statement that it generated core headline earnings per share of R35 million for the six months ending 30 November 2022.

Comparing this to 30 November 2021, when core headline earnings were R549 million, it equates to a 94% decline.

Blue Label also revealed its expected loss per share figures which range from -9.95 cents per share with its low estimate and -7.25 cents per share for its high estimate.

Comparing this to November 2021, when the company made a profit and earnings per share were 60.71 cents, it equates to a 112% to 117% decrease.

Although it had poor results, Blue Label stated that its core businesses continue to generate revenue growth. However, it did not provide any revenue figures as of yet.

Since 2016, Blue label has seen a continued downward trend in its revenue generation.