Cell C set to pay dividends after listing

Cell C is set to pay its first-ever dividend at the end of its 2027 financial year, after a turnaround that eluded previous management teams, as it forecasts revenue growth of low to mid-single digits in the “near-term”.

Financial details beyond what Cell C usually discloses are contained in a statement to shareholders issued by Blu Label Unlimited (Blu) yesterday. Revenue, the company indicated, was R13 billion in the year to May 2025, while profit came in at R3.5 billion, representing a watershed moment for the operator.

The mobile operator’s return to profitability this year reverses over two decades of losses since its 2001 launch. Although the figures don’t show a comparative period, a recent statement indicated it swung into profit this year from prior year losses.

Cell C says any payout to shareholders will depend on factors such as the group’s performance, financial position, investment plans, capital needs and strategic priorities. The company aims to have enough cash on hand to support growth, using debt carefully to maintain flexibility, and may adjust its dividend policy over time, it says.

In yesterday’s announcement, Blu – previously Blue Label Telecoms – also said the listing will simultaneously create an empowerment vehicle worth R2.4 billion, which will have a 30% stake in the operator. This will run concurrently with a share sale to selected prospective investors in a transaction intended to raise R7.7 billion.

The lengthy statement provides the first concrete confirmation of what Blu co-CEO Mark Levy has said, as well as previous tentative announcements that Cell C will list on the JSE. The listing will mark a milestone that several previous Cell C CEOs unsuccessfully attempted to achieve.

However, Cell C’s listing will only go ahead if all requirements that will be specified in a pre-listing statement – to be published “in due course” – are met. In addition, a key condition is that the restructuring plan is fully implemented.

Blu has been restructuring the mobile operator through a complex process that has involved “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”.

After navigating a complex debt restructuring following a 2020 default on loans worth around R7.3 billion, Blu invested more than R1 billion in the operator, with much of the remaining debt restructured. As of May 2025, its exposure to the operator is R3.1 billion, against which it has made provision for loss allowances.

Blu initially invested in Cell C for R5.5 billion in 2017 and had to subsequently write its stake down to zero. Levy has admitted the company made missteps in execution although it bought the stake for “all the right reasons” because a telco is a “phenomenal asset” with key spectrum.

Since recapitalising Cell C in 2022, Blu has been exploring ways to unlock more value for its shareholders. It sees listing Cell C as strengthening the business, reflecting the benefits of its turnaround and improving its sustainability.

The listing could give Cell C access to capital markets for growth or acquisitions, help Blu shareholders realise value from an investment that was previously undervalued, and raise the profile of the Cell C brand on the JSE.

Levy previously said Blu 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 [Blu].”

Speaking to ITWeb following the posting of Blu’s results for the year to May, Levy explained that proceeds from selling the shares would also make it possible for it to clear its debt or otherwise use the cash for special dividends or investing in growing the business.

Cell C shares will be made available to potential investors in SA, the US, the European Economic Area and the UK.