Telecommunications

Major South African company escapes technical insolvency

Luke Fraser

 ·13 Feb 2026

Cell C is officially no longer technically insolvent, according to the company’s first financial results since its listing on the Johannesburg Stock Exchange.

Cell C is one of South Africa’s largest mobile operators, but has faced extreme challenges over the last decade.

The company was acquired by Blue Label Telecoms in an extremely complex transaction amid the operator’s severe financial difficulties.

For several years, the company was technically insolvent, meaning that its liabilities exceeded its total assets.

Companies that are technically insolvent will not be able to settle their liabilities with their assets in the event of a liquidation.

For instance, in its financial statements for the year ended 31 May 2025, Blue Label said that Cell C had assets worth R15 billion, while its liabilities were close to R16.1 billion.

Cell C also released its financial results for the year ended 31 May 2025, which showed differing assets and liabilities due to financial reporting standards.

Cell C’s results for the period showed that it had R5.1 billion in assets and R13.4 billion in liabilities.

Using either Blue Label or Cell C financial statements, one thing remained clear: Cell C was still technically insolvent.

At the end of 2025, Cell C began a new era when Blue Label listed the mobile operator on the JSE. This gave investors direct access to the mobile operator, which is showing signs of promise.

According to Cell C’s first results on the JSE for the interim six-month period ending 30 November 2025, the group is no longer technically insolvent.

The group’s total assets of R9.9 billion exceeded its total liabilities of R7.4 billion. The group’s total equity was a positive R2.5 billion.

During the period, the group saw its revenue increase to R5.7 billion and deleveraged its balance sheet, achieving a net debt ratio of 0.6x.

“Revenue continues to improve, Prepaid is returning to growth, the Comm Equipment Company integration is set to lift earnings, and Wholesale continues to outperform as our MVNO platform scales,” said CEO Jorge Mendes.

For the interim period, the group also delivered R3.4 billion in profit, with basic earnings per share of 20,652 cents.

Not out of the woods

While Cell C may no longer be technically insolvent, a quick scan of the balance sheet shows that the group’s current assets remain smaller than its current liabilities.

The group had an excess of current liabilities over current assets of R2.34 billion for the period, with current assets at R3.21 billion and its current liabilities at R5.56 billion.

This raises concerns about the group’s liquidity, as its short-term debt obligations exceed its short-term assets, such as cash.

The group admitted that it encountered liquidity constraints predominantly attributable to the seasonal nature of working capital requirements.

The liquidity challenges were also due to its technological modernisation drive, capacity rebasing and capex investment payments.

As a result, Cell C’s management prepares detailed cash flow forecasts extending at least 12 months beyond the approval date of the financial statements.

This incorporated several key variables, including revenue trends, customer churn, device financing recoveries, and funding availability.

It noted that the forecasts reflected the implementation of a series of mitigation strategies currently in progress, such as cost optimisation and the deferral of non-essential capital projects.

Based on the assessments, the directors were satisfied that the group would maintain adequate liquidity to meet its obligations as they fall due for the foreseeable future.

The directors could thus find no material uncertainties that may give rise to a significant doubt on the group’s ability to continue as a going concern.