(Provides Cell C remark)
JOHANNESBURG, Sept 19 (Reuters) – Funds firm Net1 UEPS Applied sciences mentioned on Thursday it had written right down to zero the worth of its stake in South Africa’s third-largest cell community, Cell C, alongside the provider’s largest shareholder, Blue Label Telecoms.
Blue Label has, as the top of a gaggle of buyers together with Net1, been attempting to dig Cell C out from beneath hefty money owed because it bought its stake within the provider for five.5 billion rand ($375 million) in October 2016.
In an announcement, Net1 CEO Herman Kotze mentioned the choice of each corporations to impair the worth of their investments in Cell C to nil would don’t have any influence on Cell C’s operations or the proposed transactions it’s pursuing.
“We consider that Cell C’s long-term prospects will considerably enhance as soon as it has been recapitalised,” he mentioned.
Zaf Mahomed, Cell C chief monetary officer, mentioned the corporate was comfy with its progress in the direction of long-term competitiveness, managing its liquidity and restructuring its steadiness sheet.
“As well as, we’re happy with the improved efficiency in latest months and plan to replace the market after we launch our outcomes inside the subsequent two weeks,” he mentioned in an emailed assertion.
Net1 lately delayed its annual outcomes to attend for extra readability on developments regarding Cell C, during which a consortium is taking a minority stake.
Blue Label, which owns 45% of the provider that has struggled to compete with larger rivals MTN and Vodacom, has mentioned it hopes the stake acquisition will bolster Cell C’s steadiness sheet.
It has needed to defend its funding to shareholders involved about the price of holding the provider going, serving to immediate a roughly 80% fall in Blue Label’s share worth for the reason that begin of final yr.
Its shares rose 6% on Thursday, nevertheless, following a buying and selling assertion during which it mentioned its income would fall by greater than 20%, with Cell C’s buying and selling losses and impairment of its property, plant and gear contributing to the decline.
These have been anticipated to pull its headline earnings per share – the primary revenue measure in South Africa – downwards by over 287 cents, it mentioned. Underlying income, which exclude this and different unfavorable components weighing on outcomes, would rise, it mentioned.
Net1 purchased into Cell C in 2017, when it paid 2 billion rand for a 15% stake within the provider.
$1 = 14.6648 rand
Reporting by Emma Rumney; Enhancing by Dale Hudson and Mark