Jose dos Santos. Picture: SUNDAY TIMES
Jose dos Santos. Picture: SUNDAY TIMES

Blue Label Telecoms said on Friday that a consortium of investors had agreed to take a minority stake in its heavily indebted associate company, mobile operator Cell C.

The Buffet Consortium would become a minority shareholder in Cell C, helping it to bolster its balance sheet and attain sustainable growth, said Blue Label, which owns 45% of the operator.

The Buffet Consortium is led by billionaire businessman Jonathan Beare.

Cell C and Blue Label, which bought its stake in the operator in 2017 at the same time that Net1 took on a 15% stake, declined to give further details on the deal.

In a separate announcement on Friday, Blue Label said Cell C’s CEO since 2014, Jose Dos Santos, would step down on March 1.

Dos Santos would thereafter take on a consultancy role, giving strategic advice to Cell C chair Kuben Pillay.

“Dos Santos will be involved in the delivery of Cell C’s strategic intent, which includes the reshaping of Cell C’s debt to ensure the company’s continued sustainability,” the mobile operator said in its own statement.

Pillay said Dos Santos had “successfully led Cell C through some of its toughest times, and spearheaded the recapitalisation of the business”.

The operator said an interim CEO would be announced “shortly”.

Meanwhile, Blue Label said it would report a loss for the six months to November 2018 when it published its results on February 28.

It expects to report a core headline loss per share of between 8.54c and 14.23c, from core headline earnings per share of 168.42c a year before.

“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 thereon,” Blue Label said.

Cell C’s valuation has been revised lower in recent months, from R13.4bn in November 2018 to about R12.9bn. On top of this, in the prior period, Blue Label’s results included a once-off deferred tax asset from Cell C worth R864m.

Blue Label’s shares, which lost nearly two-thirds of their value in 2018 partly on concerns about Cell C’s high debt levels, closed 1.9% higher at R5.35 on Friday.

Earlier in February, Net1 said its investment in Cell C had shrunk by $15.8m (R221m) amid a broader decline in the valuation of mobile operators.

hedleyn@businesslive.co.za