Cell C is heading to the JSE
Cell C is preparing for an IPO, with the telco company set to list all of its issued ordinary shares on the Main Board of the JSE.
Cell C is offering existing shares owned by Blu Label’s The Prepaid Company (TPC) by way of private placement to qualified investors, subject to market conditions and JSE approval.
“The decision to pursue a listing on the JSE marks a significant and exciting step in Cell C’s growth story,” said Cell C CEO Jorge Mendes.
“The separate listing of the company will enable the group to streamline its balance sheet, reinforce its growth strategy and strengthen its competitive positioning of business segments.”
“The listing is expected to be an enabler of our strategy, as it will elevate the Cell C brand, enhance access to capital to sustain growth, instil public transparency and market discipline, and enhance the group’s profile with all stakeholders.”
On top of the listing, an offer will be made by TPC for the sale of shares held by TPC to selected prospective investors, intended to raise about R7.7 billion.
This includes a roughly R500 million overallotment option and also includes an allocation of shares of up to approximately R2.4 billion to an empowerment vehicle.
TPC will then use the proceeds it receives to strategically enhance its financial position.
The proceeds raised will be allocated towards settling certain interest-bearing borrowings and other debt obligations.
A portion of the funds will then be earmarked for dividends to Blu Label’s shareholders.
Finances and details
The Cell C Group has taken a capex-light approach to its mobile network, which uses its own spectrum assets in combination with physical network infrastructure owned by other mobile network operators.
This approach has freed up capital for other projects. The network also handles MVNO’s services for several other companies, including the fast-growing Capitec Connect.
Cell C had roughly 7.6 million mobile subscribers. Prepaid customers represented roughly 90% of the company’s total subscriber base. Postpaid customers make up a minority of the total subscriber base.
On a standalone basis, Cell C had R11.1 billion in revenue during the year ended 31 May 2025, an increase from the R10.8 billion in the twelve months ended 31 May 2024.
Cell C had EBITDA of ZAR2.1 billion (ZAR2.0 billion); and EBIT of ZAR1.6 billion(ZAR1.4 billion), for the same year-long periods.
As part of the deal, Cell C is also undergoing a restructuring. As is customary for everything Cell C and Blu Label related, the restructuring is complex:
- Step 1 – 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.
- Step 2 – Acquisition of CEC: Cell C will acquire 100% of CEC (a wholly owned subsidiary of BLU) 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 oversight of supply chain, commercial operations, marketing, billing, credit, and collections.
- Step 3 – Airtime asset transfer: TPC will transfer Cell C airtime currently held by TPC on its balance sheet to Cell C on loan account, which shall be settled in exchange for newly issued additional Cell C shares.
- Steps 4 and 5 – SPV restructure: The Special Purpose Vehicles (“SPVs”) currently holding equity interests in Cell C will also be unwound as part of the Restructuring.
- Step 6 – Flip-up: The holders of Cell C shares (including TPC) will exchange their Cell C shares for Shares in the Company in preparation for the Listing of the Company. All Cell C shareholders, including TPC, will hold the same proportion of the Shares as the proportion of Cell C shares held by those Cell C shareholders immediately prior to the Flip-up.
Cell C said that it has successfully executed a high-impact turnaround strategy that has stabilised and streamlined the business and has positioned it for future growth.
Since the implementation of its turnaround strategy, Cell C has experienced improvements in its revenue diversification and cost containment.
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