S.Africa's debt-ridden Cell C worthless, biggest shareholders say

Lesaka Technologies

19/09/2019 15:43

JOHANNESBURG, Sept 19 (Reuters) - Payments company Net1 UEPS
Technologies  UEPS.O  said on Thursday it had written down to
zero the value of its stake in South Africa's third-largest
mobile network, Cell C, alongside the carrier's largest
shareholder, Blue Label Telecoms  BLUJ.J . 
    Blue Label has, as the head of a group of investors
including Net1, been trying to dig Cell C out from under hefty
debts since it purchased its stake in the carrier for 5.5
billion rand ($375 million) in October 2016. 
    In a statement, Net1 CEO Herman Kotze said the decision of
both firms to impair the value of their investments in Cell C to
nil would have no impact on Cell C's operations or the proposed
transactions it is pursuing. 
    "We believe that Cell C's long-term prospects will
significantly improve once it has been recapitalised," he said. 
    Cell C did not immediately comment.
    Net1 recently delayed its annual results to wait for more
clarity on developments relating to Cell C, in which a
consortium is taking a minority stake.  urn:newsml:reuters.com:*:nL5N20H3XX
    Blue Label, which owns 45% of the carrier that has struggled
to compete with bigger rivals MTN  MTNJ.J  and Vodacom  VODJ.J ,
has said it hopes the stake acquisition will bolster Cell C's
balance sheet. 
    It has had to defend its investment to shareholders
concerned about the cost of keeping the carrier going, helping
prompt a roughly 80% fall in Blue Label's share price since the
start of last year.
    Its shares rose 6% on Thursday, however, following a trading
statement in which it said its profits would fall by more than
20%, with Cell C's trading losses and impairment of its
property, plant and equipment contributing to the decline. 
    These were expected to drag its headline earnings per share
- the main profit measure in South Africa - downwards by over
287 cents, it said. Underlying profits, which exclude this and
other negative factors weighing on results, would rise, it said.
    Net1 bought into Cell C in 2017, when it paid 2 billion rand
for a 15% stake in the carrier. 
($1 = 14.6648 rand)

 (Reporting by Emma Rumney; Editing by Dale Hudson)
 ((Emma.Rumney@thomsonreuters.com; +27115952832;))