As part of its interim results reporting for the half year ended November 2018, Blue Label Telecoms has published the 2018 full year financial results for Cell C.
Blue Label, through its subsidiary The Prepaid Company, owns an effective 45% stake in Cell C.
It pointed to losses at the mobile operator and support costs as being the key driving factors behind the group’s interim loss of R113 million.
According to Cell C’s financial report, for the year ended December 2018, it posted a net loss of R1.273 billion for year, down from a profit of R4.1 billion the year before.
The 2017 profit was due to a R4.2 billion capital injection from Blue Label as part of its restructuring deal that year.
Revenue was down slightly to R15.7 billion, with the group managing to reduce expenses in most places – however, without the R4.2 billion capital injection from Blue Label on the books, the group’s financing costs continue to drag.
Operating profit before finance costs and tax amounted to R1.4 billion, however associated losses from finance costs (R4.34 billion) and equity (R831 million) led to the net loss of R1.27 billion.
On an interim basis, Cell C reported a net loss of R634-million in the six months ended 30 November 2018.
Subscribers grew to 17.2 million in 2018, from 16.3 million, while capex doubled to R2 billion, from R1.19 billion in 2017.
Total ARPU dropped 5% to R69, from R73, with contract customers however, spending R233 with thew operator, from R209 before.
Impact on Blue Label
According to Blue Label, for the six months ended November 2018, Cell C’s net loss amounted to R634 million.
Blue Label’s share thereof, due to its 45% stake in the company, came to R285 million, with Blue Label noting that its accounting policies exclude equity-settled share-based payment charges from its associates.
“Accordingly, an adjustment of R51 million and R106 million respectively was required. The net result was a negative contribution of R128 million to Blue Label’s core earnings,” it said.