Cell C’s losses, which totalled R8 billion<\/a><\/strong>, amounted to R3.6 billion for Blue Label directly, as the company has a 45% stake in the operator.<\/p>\n As a result, Blue Label reported a headline loss of 312.49 cents per share, and a core headline loss of 304.77 cents per share.<\/p>\n Although the core businesses of the Blue Label Group continued to generate profit, the predominant negative contributions to group earnings were attributable to Cell C.<\/p>\n “It is evident that the investment in Cell C had a significant negative impact on group earnings,” Blue Label said at the time.<\/p>\n Bad investment<\/strong><\/p>\n In an interview with CNBC Africa<\/a><\/strong>, Levy was asked directly whether Cell C was a bad investment.<\/p>\n “It’s a hard question. I think it’s been a hard 12 months,” he said.<\/p>\n “At the time we went in eyes wide open – we did the right due diligence, we got a team from London and PwC to help us. So I think the reason for doing the deal was all good, and for the right reason,” Levy said.<\/p>\n “But I think in hindsight, of course it has been a bad investment. Our share price speaks for itself.”<\/p>\n When Blue Label acquired its stake in Cell C in August 2017, the group’s share price was sitting around R16.50. In the two years since, it has fallen 84% to R2.60.<\/p>\n Levy said that the core of Blue Label’s business has done really well – but where the company would have usually seen the benefit of these core operations, it has now seen the opposite due to Cell C.<\/p>\n “Unfortunately it has been a bad one. But we’ve drawn a line in the sand now, and hopefully we can turn it around,” he said.<\/p>\n The line in the sand, Levy said, was writing off Blue Label’s entire investment in Cell C to zero. He said that the write off wasn’t because the group believes Cell C won’t make it, or that there is no opportunity in the network operator, but it was a necessity in terms of the group’s finances.<\/p>\n “Although this isn’t a good thing for us, the good thing about it is that it’s the bottom for us, and if we can turn (Cell C) around and deliver what we’ve promised on, well then it’s only upside for us,” he said.<\/p>\n Regarding Cell C’s debt and losses, Levy said that the recapitalisation plans would address this, with the company close to sealing the deal with a network partner which will set it on the right path.<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2019\/10\/Blue-Label-shares.png\")
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