Blue Label's joint CEOs, Mark and Brett Levy. Picture: Supplied.
Cell C’s financial turnaround is gaining momentum, and the mobile network operator and its major shareholder Blue Label Telecom are in a good position to move forward profitably from June, said joint CEO Brett Levy.
Cell C’s performance was released as part of the interim results of Blue Label, which holds 49.53% of Cell C and has the possibility of acquiring another 10%, giving it control, pending the repayment of loans from a special purpose vehicle, which was formed to house loans used to recapitalise Cell C in 2022.
Levy said on Thursday that he was confident the loans would be repaid and the shareholding would be returned to Cell C.
In the six months to November 30, Cell C lifted revenue by 13%, earnings before interest, tax, depreciation, and amortisation by a whopping 87%, service revenue by 7%, broadband revenue increased by 25%, MVNO (mobile virtual network operator) revenue increased by 22%, while mobile data traffic increased by 27% compared with the same six-month period a year before.
Blue Label itself reported static headline earnings at 47.20 cents per share (47.15).
Its gross profit increased 2% to R1.626 billion, corresponding to an increase in margins to 22.44% from 21.08%, partially attributed to growth in “PINless top-ups”, prepaid electricity, ticketing, and universal vouchers, where only the gross profit earned is recognised as revenue.
This was offset by margin compression, despite overall growth in gross electricity revenue, supported by NERSA-approved tariff adjustments. Blue Label’s revenue fell by 4% to R7.25bn, but if the gross amount generated on “PINless top-ups”, prepaid electricity, ticketing, and universal vouchers was included, it increased by 8% to R47.4bn.
EBITDA was 6% lower at R653.16m. Finance costs fell by 16% to R532.4m, while finance income increased by 26% to R442.66m.
The decline in EBITDA and the modest growth in core headline earnings were primarily driven by a reduction in the Comm Equipment Company (CEC) subscriber base, a lower average revenue per user (ARPU), and increased finance costs associated with the sale of a portion of the CEC handset receivable book.
Revenue from universal vouchers increased 17% to R7.3bn, driven by BluVoucher sales through financial institution platforms. Gross ticketing revenue increased by 5% to R718m, primarily from revenue generated through commuter bus channels.
Electricity revenue generated on behalf of the utilities increased by R3.1bn (16%) to R21.9bn. Net commission earnings, based on kilowatt-hour (kWh) consumption, remained stable at R146m. The flat commission earnings were driven by inflationary increases linked to kWh usage and higher electricity consumption, following the cessation of load shedding.
Due to previously unrecognised equity-accounted losses associated with the Cell C investment; an increase in the cost of the investment of R241m was recognised as a loss in the group income statement on December 31, 2024, thereby reducing the balance of previously unrecognised equity-accounted losses.
In December 2024, TPC entered into a banking facility agreement with Rand Merchant Bank for R311m scheduled to mature on February 28, 2025. The facility carries an interest rate of Prime plus 1%. TPC was in the process of securing an extension prior to the maturity date for an additional 18 months.
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