Cell C is undergoing a massive restructuring, which could unlock serious value for the mobile operator and its parent Blue Label.
Flagship Asset Management Global Portfolio Manager Philip Short believes Cell C and Blue Label Telecoms will benefit from the major restructuring planned for the business—and that Capitec could be a big game changer for the group.
The restructuring includes a debt-for-equity swap and a planned IPO. Short believes this could unlock R27 billion in value, up from its current R13 billion market capitalisation. “Through smart corporate finance activity, BLT now owns approximately 90% of the debt on Cell C’s balance sheet and 80% of the equity,” said Short.Short said that a major area that Cell C could benefit from is its partnership with Capitec to create Capitec Connect.
Capitec Connect has seen massive growth, reaching 1.5 million subscribers by the end of 2024, with a current run rate of 180,000 monthly subscribers. Cell C also benefits from network share agreements with MTN and Vodacom, while maintaining its own spectrum. This allows strong network quality without capital-intensive infrastructure.
Cell C has negative equity, meaning its profits cannot be recognised in Blue Label’s financials. As the turnaround continues, this will change.
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