Cell C aims for R7.7 billion JSE listing to enhance growth and transparency

Well known South African cellphone company Cell C plans to raise about R7.7 billion through a listing on the main board of the JSE, this after a long period of restructuring.

Although a date was not yet disclosed, a market source indicates the listing may be “imminent.” The company, the fourth largest mobile operator in the country, announced on Wednesday that it plans to list by way of an offer of shares by The Prepaid Company (TPC), an owned subsidiary of JSE-listed telecoms group BLU Label, by way of a private placement to qualified investors, subject to market conditions and to JSE approval.

The R7.7bn would include an overallotment option of R500 million and an allocation of up to R2.4bn to a black economic empowerment vehicle - telecom regulations require the company to maintain a 30% shareholding by historically disadvantaged persons, and TPC are taking steps to ensure the requisite B-BBEE ownership structure is in place at the listing. BLU’s existing empowerment credentials are achieved through a broader B-BBEE ownership structure, rather than a single anchor partner.

Cell C will not receive any proceeds from the share sale. To help the process, a restructuring ahead of the listing will see Cell C separate from BLU. BLU’s share price notched up a robust 4.9% to R13.23 on the JSE Wednesday afternoon after the listing announcement was released.

"The decision to pursue a listing on the JSE marks a significant and exciting step in Cell C's growth story. The separate listing will enable the group to streamline its balance sheet, reinforce its growth strategy and strengthen its competitive positioning,” said Cell C’s CEO Jorge Mendes.

He said the listing was expected to be an enabler of their strategy, as it would elevate the Cell C brand, enhance access to capital, instill public transparency and market discipline, and enhance the group's profile with stakeholders.

The proposed listing follows a four-year-long financial and operational recuperation of the group - in July 2021, Cell C initiated a turnaround strategy focused on better efficiencies, reducing expenditure and optimising traffic. This included conversion from a fixed-cost infrastructure-based network to a variable operational expenditure model.

This, with a recapitalisation of the debt structure, saw Cell C re-emerge as a "lean, agile and customer-focused telecommunications challenger in South Africa," said Mendes.

For the year to May 31, 2025, the group generated earnings before interest tax depreciation and amortisation of R3.7bn, with “robust free cash flow” and a “significantly strengthened balance sheet” generated from revenues of R13.7bn.

To enable the listing, a pre-IPO restructuring would entail a debt-to-equity conversion of TPC's outstanding debt claims against Cell C.

A second step would see Cell C acquire 100% of BLU subsidiary Comm Equipment Company (CEC) from TPC in exchange for additional Cell C shares.

CEC is responsible for Cell C's postpaid offerings. The internalisation will enable Cell C to assume full responsibility over its postpaid customer base, including oversight of supply chain, commercial operations, marketing, billing, and collections.

Step three entails TPC transferring Cell C airtime held by TPC on its balance sheet to Cell C, on loan account, which will be settled in exchange for Cell C shares.

The fourth step will see the Special Purpose Vehicles (SPVs) currently holding equity interests in Cell C being unwound. Cell C executive team members will collectively hold 4.5% of the shares.

Cell C’s strategy enables it to deliver national high-grade coverage without the heavy capex investment required to compete on breadth and quality of coverage. The national dual platform is underpinned by long-term agreements with MTN and Vodacom that ensure capacity prioritisation and access to its partners' investments in emerging mobile technologies such as "fifth generation" (5G) mobile services.

“Over the past 24 months, the strengthened Cell C executive management team has returned the Cell C business to a strong growth trajectory with significant improvement in operational and financial metrics, driving the sustainable growth and profitability going forward,” said Mendes.

As at May 31, 2025, Cell C had about 7.6 million mobile subscribers. Prepaid customers represented about 89% of the subscriber base, with postpaid customers making up a minority of the total subscriber base.

Cell C also has, among others, the following mobile virtual network operators (MVNOs) on its network: Capitec Connect, FNB Connect, Shoprite K'nect mobile, uConnect, me&you, smartmobile, C-connect, Old Mutual Connect and mrpmobile. Cell C is also in negotiations with several potential additional MVNO partners.

BUSINESS REPORT