Blue Label Telecoms earnings railroaded by Cell C losses

Blue Label Telecoms advised shareholders on Thursday (19 September), that headline and core headline earnings per share for the year ended May 2019 are expected to decrease by more than 20% from the prior year, citing massive losses at Cell C.

Core headline earnings per share are expected to show a loss of between 302.77 and 306.77 cents per share, from 120.61 cents before.

Cell C trading losses and related impairments contributed to 286.51 (loss) cents per share.

Blue Label said that although its core businesses continued to generate profits, the predominant negative contributions to the May 2019 basic, headline and core headline earnings per
share were attributable to:

  • Cell C’s trading losses, impairment of its property, plant and equipment, the impact of a de-recognition of its deferred tax asset and the impairment of Blue Label’s total investment therein. (286.51)
  • Fair value downward adjustments of the complete exposure relating to SPV1 and SPV2 (the structure of SPV1 and SPV2 was detailed in the trading statement published on SENS on 22 February 2019).
  • A fair value downward adjustment of Glocell Distribution, attributable to the impact of unfavourable wholesale trading conditions therein.
  • An Impairment of Blue Label’s total investment in the Oxigen India group, including 2Dfine Holdings Mauritius, as well as providing for loan impairments and guarantees payable therein. This was attributable to an anticipated corporate transaction not materialising.
  • Partial impairments of goodwill relating to Viamedia and Blue Label Connect and a partial impairment of the investment in the SupaPesa joint venture.

When removing these items, Blue Label said it expects core headline earnings from the balance of the entities within the group to be between R885 million and R922 million compared to R716 million in the prior year. This equates to a growth of between 24% and 29%.

Core headline earnings per share from the balance of the entities within the Blue Label group are expected to be between 96.95 cents and 100.95 cents for the year ended May 2019, compared to 83.65 cents in the prior year. This represents an increase of between 16% and 21% on the prior year, it said.

The group expects to publish its results next week (26 September).


Read: JSE warns Blue Label that delayed results could lead to suspension

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Blue Label Telecoms earnings railroaded by Cell C losses