Blue Label shares slide to 10-year low

Shares in Blue Label Telecoms are at their worst level in more than a decade after the company’s interim results fell short of the market’s expectations.

The stock was 16.2% lower at R3.82 at lunch time on Friday, following a 25.5% freefall the day before.

The company, which distributes prepaid electricity and airtime, reported a core headline loss of R105m for the six months to end-November on Thursday, with its share of losses from Cell C amounting to R123m.

Blue Label has a 45% stake in the mobile operator.

Listen to further analysis:

For more podcasts, click here. 

The group reported that revenues fell 10% to R12.3bn, dragged lower by a 22% decline in prepaid airtime and data sales.

Within the core Blue Label business, the market was concerned about “weak” prepaid sales, Imtiaz Suliman, portfolio manager at Sentio Capital, said on Thursday.

The market was also unhappy with Cell C’s loss and its higher debt levels — the operator’s loans and borrowings grew from R6.8bn to R8.9bn, Suliman said.

To bolster the operator’s balance sheet, Blue Label said last week a consortium of investors led by billionaire property mogul Jonathan Beare had agreed to take a minority stake in Cell C.

Blue Label joint-CEO Brett Levy said Cell C was on track to make a profit in 2020.

hedleyn@businesslive.co.za