Blue Label Telecoms Ltd. is considering offers for potential new investment in Cell C Pty Ltd. after posting a first-half loss partly caused by its interest in South Africa\u2019s third-largest mobile-phone company.<\/p>\n
Blue Label led a rescue of Cell C two years ago, but the move is yet to pay off as the unit struggles with debt and the dominance of larger rivals, Vodacom Group Ltd. and MTN Group Ltd.<\/p>\n
Cell C knocked R1.05 billion ($75 million) off Blue Label\u2019s first-half core headline earnings, said the Johannesburg-based provider of services such as airtime, and the shares fell as much as 21%, the most since 2008.<\/p>\n
Cell C needs more funding, and Blue Label is considering a number of potential transactions that would build on last week\u2019s deal with investment firm Buffett Group, according to Chief Executive Officer Mark Levy.<\/p>\n
\u201cThe recent transaction will provide us with additional balance sheet support for Cell C and help us meet possible capital needs,\u201d Levy said in an interview.<\/p>\n
He declined to comment on the details of any new deals. Telkom SA SOC Ltd., South Africa\u2019s biggest fixed-line provider, is interested in making an offer, people familiar with the matter said last year.<\/p>\n
Since Blue Label bought into Cell C as part of the R5.5 billion recapitalisation deal, about two thirds of its value has been wiped out on concerns that the investment would be a drain on finances. Blue Label needs to boost Cell C\u2019s balance sheet, renegotiate interest terms on debt, as well as consider any offers from investors, Levy said.<\/p>\n
Blue Label extended losses and was down 21% at R4.84 by 15h45. in Johannesburg, valuing the group at R4.4 billion.<\/p>\n