Blue Label Telecoms is considering offers for potential new investment in Cell C, after posting a first-half loss partly caused by its interest in the mobile operator, Bloomberg reported. Blue Label led a rescue of Cell C two years ago, but the unit is struggling with debt and the dominance of larger rivals. Cell C knocked ZAR 1.05 billion off Blue Label's first-half core headline earnings, said Blue Label, and the shares fell as much as 21 percent, the most since 2008.
Cell C needs more funding, and Blue Label is considering a number of potential transactions that would build on last week’s deal with investment firm Buffett Group, according to CEO Mark Levy. He declined to comment on the details of any new deals.
Telkom, South Africa’s biggest fixed-line provider, is interested in making an offer, people familiar with the matter said last year. Since Blue Label bought into Cell C as part of the ZAR 5.5 billion recapitalisation deal, about two thirds of its value has been wiped out by concerns that the investment would be a drain on finances. Blue Label needs to boost Cell C’s balance sheet, renegotiate interest terms on debt, as well as consider any offers from investors, Levy said.
