Blue Label shakes up Cell C, pulls in new investor

24 February 2019 - 00:22 By TJ STRYDOM

Two years after buying a 45% stake in debt-laden Cell C, Blue Label Telecoms is shaking up management and pulling in a new investor to stem the losses.
Jose dos Santos will step down as CEO next week after five years at the helm, but will still be a consultant to the board of SA's third-largest mobile operator, Blue Label said on Friday.
The company also announced that a consortium led by property magnate Jonathan Beare's Buffet Investments will take a minority stake in Cell C.
Without providing details about the size of the stake or the amount invested, Blue Label said: "With Buffet support the Cell C balance sheet will be bolstered and ensure Cell C's sustainable growth for the future."
Buffet and Beare declined to comment, saying only that Cell C will issue a statement in due course.
The mobile operator's debt has been a problem for years and Dos Santos was tasked with turning the business around as former owner Oger Telecom, a Saudi Arabian company, sold down its stake.
But since acquiring the stake in Cell C, the mobile operator has weighed on Blue Label's share price and the company, also on Friday, flagged a loss for the half-year until end December.
"Although the core businesses of the Blue Label group generated positive growth, the once-off underlying financial adjustments relating to Cell C had a negative impact," Blue Label said.
When Blue Label first invested, the idea was to grab a larger share of profits by vertically integrating Cell C with the sales of airtime. But the weak economy and consumers' changing mobile and data habits held back growth not only for Cell C, but also for larger rivals Vodacom and MTN.
Consumers shop around for special offers and though data consumption has risen sharply, the revenue from it has been mostly flat for mobile operators.
Blue Label's share price has plummeted more than 60% in the last year, but following the announcements on Friday it rallied 3.8%.
Blue Label said Dos Santos led Cell C through the recapitalisation of the business and design of its new strategic direction.
The company announced a year ago that Cell C's debt had been reduced to R6bn from R17bn.
It also refinanced R1.4bn of its debt in November...

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