BLU’s carrying value of Cell C has dropped. (Photograph by Nicola Mawson)
JSE-listed Blu Label Unlimited is set to take a R5.2 billion hit on its stake in Cell C because the value of its investment at listing was lower than the value it was carrying on its books, resulting in an accounting loss.
In a trading statement released this afternoon, Blu Label Unlimited – or BLU – says it expects its earnings per share for the six-month period ended 30 November 2025 to decline by more than 100%.
This is the result of it recognising a loss linked to its investment in Cell C following the telecoms operator’s listing last November. BLU expects to report an earnings per share loss of between 556.44c a share and 554.68c a share.
In the trading update, BLU explains that there was a R6 billion loss created by the gap between what it was carrying in the Cell C investment on its books and its value upon listing.
However, BLU’s R6 billion loss was somewhat offset by a gain of R841 million due to the reassessment of a previously held interest when its subsidiary, The Prepaid Company acquired control of Cell C in September 2025.
Without the hit, BLU would have reported revenue of R5 billion and net profit after tax of R389 million, its trading statement says.
Cell C, which BLU acquired as a subsidiary last September after having initially invested R5.5 billion in the operator in 2017, listed on the JSE in November, with shares opening at R27, valuing the company at R9 billion.
Cell C was trading at R28.98 this afternoon.
Prior to listing the company, BLU had written down portions of its investment. The listing enabled Cell C to pay off its debt to BLU.
Cell C first turned a profit in the year to May. At that time, Blu Label Unlimited reported that its share of Cell C’s accumulated net loss for the period 1 June 2019 to 31 May 2024 was R1.6 billion.
However, its share of profits from the mobile network operator came in at R1.5 billion. The JSE-listed company explained at the time that it had “net positive extraneous contributions” to earnings, which were all attributable to its investment in Cell C.
These gains included a reversal of an investment impairment of R1.559 billion relating to the initial impairment of R2.5 billion on Blue Label’s investment in Cell C, originally recognised as at 31 May 2019.
Of the total impairment, R962.5 million was reversed in November 2022, with the balance of R1.559 billion reversed in the year to May 2025, which it said was in line with an improvement in Cell C’s equity valuation.
Its income was also affected through recognition of the group’s share of Cell C’s accumulated net losses of R1.607 billion for the period from 1 June 2019 to 31 May 2024.
“As at 31 May 2025, the group has fully recognised its share of all previously unrecognised historical losses associated with Cell C,” it said.
As a result, there were positive headline earnings adjustments of R1.585 billion, attributable to the reversal of BLU’s share of historical impairments recognised by Cell C of R3.144 billion, partially offset by the reversal of the impairment previously recognised on Blue Label’s investment in Cell C of R1.559 billion.
BLU will report interim results next Wednesday. Its share was 3.13% down on the day, although its five-year gain is 85.33%
