Blue Label Telecoms has moved to allay fears around network operator Cell C, after the mobile operator published an open letter discussing the many difficulties the group faces.
In the letter, Cell C CEO Douglas Craigie Stevenson was open about the problems the telco was facing, saying that company faces financial and other challenges, and will implement a new business plan which will simplify its business model.
In the plan, Cell C would also:
- Pursue a recapitalisation to optimise the capital structure.
- Extract greater value from its roaming agreement; and
- Optimise network revenue and usage.
“The goal for Cell C is to become significantly better focused on operational performance, sound business ethics and accountability throughout the business,” he said.
Shares in Blue Label Telecoms – which led a recapitalisation of Cell C almost two years ago and holds a 45% stake in the carrier – fell more than 15% to their lowest since 2008.
In response to shareholder concerns raised as a result of Cell C’s open letter, Blue Label issued a statement on the JSE news service to reassure shareholders that “no material concerns or issues have been uncovered as a result of Cell C’s new management conducting a deep dive into the business practices of Cell C in a drive for efficiencies”.
The group said that this is an ongoing process and shareholders will be updated as progress is made.
“In anticipation of the transaction resolving the liquidity position at Cell C, and launching the new, improved operating model, Cell C’s management and board are ensuring that Cell C is sufficiently geared to run the business as required,” Blue Label said.
“Blue Label and the Buffet Consortium are fully apprised of Cell C’s drive to effectively and efficiently utilise all of its network, technology and human capital assets, and are supportive of management’s initiatives.”
Cell C was recently downgraded by ratings agency S&P Global, which announced that it had lowered its rating on Cell C to SD (selective default) from CCC.