Telecommunications

Major South African company still technically insolvent 

Luke Fraser

 ·27 Aug 2025

Cell C remains technically insolvent, but there are signs that the telecommunications company is starting to turn the corner ahead of a possible listing. 

In its parent company Blue Label’s results for the year ended 31 May 2025, Cell C’s balance sheet showed that total assets stood at R15 billion, up from R14.1 billion a year prior. 

The group’s total liabilities stood at around R16 billion, giving the group a negative equity of R1.0 billion. 

This makes the company technically insolvent, as, in the event of a liquidation, it would be unable to pay its creditors. 

However, this is a significant improvement from the negative equity of R3.1 billion seen a year ago. 

Cell C is also showing other signs of promise, with its revenue increasing from R10.8 billion to R11.1 billion. 

The group’s net profit after taxation also increased from R279 million to R2.2 billion due to R2 billion in deferred tax. 

These improvements come as Blue Label has been investigating a potential restructuring to unlock shareholder value, with one of the objectives being the separation and listing of Cell C.

‘The proposed restructure is expected to include a series of related transactions designed to optimise Cell C’s capital structure and balance sheet in preparation for such a listing,” said Blue Label.

The implementation of the restructure and potential listing will remain subject to the approval of the board of Blue Label and Cel C, with requisite shareholder and regulatory approvals still needed. 

The group said that the restructure will deliver benefits to Blue Label and its shareholders, as it will allow investors to evaluate the value and strategic focus of Blue Label and Cell as standalone businesses. 

As is seemingly customary with Blue Label’s stake in Cell C, the proposed restructuring will be incredibly complex. 

It includes the acquisition by Cell C of 100% of Comm Equipment Company Proprietary Limited (CEC) from the Prepaid Company Proprietary Limited, in exchange for additional shares in Cell C – all of these companies are Blue Label subsidiaries. 

CEC is the subsidiary responsible for Cell C’s postpaid offerings. 

“Its internalisation will enable Cell C to assume full responsibility for its postpaid customer base, including supply chain oversight, commercial operations, marketing, billing, credit management, and collections,” said Blue Label. 

The transaction remains subject to several conditions precedent. However, the group has already received approval from the Competition Tribunal for the proposed acquisition.

Good times for Blue Label

The Cell C improvement also comes amidst a significant rise in earnings from Blue Label. 

The group’s net profit increased 264% to R2.5 billion, while its headline earnings rose 262% to R4.1 billion. 

“This year’s results are a testament to the strength of our core businesses and the depth of our relationships across every segment we serve,” said Mark Levy, Joint CEO of Blue Label Telecoms. 

“But more importantly, they set the stage for what comes next. The new BLU is a more focused, integrated and agile organisation, designed to capture growth opportunities and deliver sustained value in a fast-changing digital economy.”

The group recently received requisite shareholder approval to change its name to Blu Label Unlimited, starting 3 September 2025.

The company said it is undergoing a significant restructuring process involving separating its telecoms and non-telecoms business units, hence the name change.