Blue Label Telecoms currently owns 49.5% of Cell C and is seeking final regulatory approval to buy an additional 4.04% stake. (Photograph by Lesley Moyo)
Blue Label Telecoms has started making plans to exit Cell C through a separate JSE listing, in a complex restructuring that could result in both companies being debt-free.
This morning, Blue Label announced it is embarking on a pre-listing restructuring, comprising “various transactions aimed at optimising Cell C’s capital structure and balance sheet in preparation for a separation and listing of the Cell C ListCo business on the JSE”.
Joint-CEO Mark Levy has explained that listing the mobile network operator (MNO) would allow Cell C to repay what it owes Blue Label.
Blue Label has bailed out Cell C several times. When Cell C defaulted on loans worth around R7.3 billion in 2020, Blue Label pumped more than R1 billion into the operator, with much of Cell C’s remaining debt restructured.
Speaking to ITWeb last week following Blue Label’s full-year results, Levy added that proceeds from selling the shares would also make it possible for Blue Label to clear its debt, or otherwise use the cash for special dividends or investing in growing the business.
To prepare for the spin-out – which is still subject to regulatory approvals – Blue Label will create a new company, ListCo, which will hold all of Cell C that is currently under Blue Label’s ownership after various restructuring steps are implemented.
These steps include Cell C issuing new shares worth R3.7 billion instead of repaying its debt to The Prepaid Company (TPC), the vehicle through which Blue Label is buying Cell C. As of May 2025, Blue Label’s exposure to the operator is R3.1 billion, although it has made provision for loss allowances.
Blue Label currently owns 49.5% of Cell C and is seeking final regulatory approval to buy an additional 4.04% stake, which would take its ownership to 53.5%, giving it a controlling stake.
Other share-for-debt and asset exchanges will take place in the coming weeks to ensure a clean structure before incorporating Cell C into ListCo, the company that will eventually list on the JSE.
Blue Label joint-CEO Mark Levy says the company is committed to listing Cell C.
Blue Label said it is not yet possible to specify the number of shares or the price of the equity stake involved, but TPC’s final stake in ListCo will not be less than 26%.
Levy said Blue Label wants to make sure “all of the ghosts of the past are gone” and enable Cell C to stand on its own for at least the next 20 years. “We will fix the balance sheet; we will split Cell C out of Blue Label,” he said.
He also noted that Blue Label – which will soon be renamed Blu Label Unlimited – is “committed” to listing the operator, a move that several previous CEOs have unsuccessfully attempted.
Blue Label’s results last week disappointed investors, sending is shares down to R12.20 on Thursday, from R13.08 the previous day. They are up 126.4% so far this year.
In this morning’s statement, Blue Label said Cell C management will receive 4.5% of ListCo’s shares at no cost to ensure “an appropriate management incentive structure is in place for Cell C ListCo management”.
Levy last week highlighted the role Cell C CEO Jorge Mendes played in stabilising the business, describing him as an executor who turned Cell C into an asset after it was on the brink of failure. The Competition Commission also emphasised the dire situation at Cell C during hearings on Blue Label’s bid to increase its stake to a majority.
Representing the commission, Themba Mahlangu told the Competition Tribunal: “It’s in the public domain that the MNO isn’t doing well financially, and that if, given these benefits that may flow from this transaction, perhaps it’s given another chance at life.
Separately, Blue Label said Johannes Mthimunye had stepped down from its board, where he was an independent non-executive director and chairman of the audit, risk and compliance committee, to “focus more fully on his role” as independent chairman of Cell C.
Implementation of the pre-listing restructure as part of plans to list Cell C is subject to several conditions, including shareholder approval and, if required, court approval.
“His [Mthimunye’s] transition marks a pivotal stage in the execution of Cell C’s ongoing restructuring strategy, including the potential listing on the JSE,” said Blue Label.
The company added that Mthimunye “has been a valued member of the Blue Label board for over a decade, during which time he has made a significant and lasting contribution to the governance and strategic direction of the group”.
