Shares in JSE-listed telecoms firm Blue Label are tanking despite the firm posting on Wednesday a 4% rise in core headline earnings per share.
By 10:29 am, the shares were trading 10.65% lower at R6. 88, giving the company a market value of R10.2 billion on the JSE.
The company’s result were positive according to the company, but its stock continued to be hammered.
Yesterday, Blue Label Telecoms shares tumbled on news that mobile phone operator Cell C is still in the red.
Blue Label Telecoms owns 45% of Cell C, which is struggling to compete and has a mountain of debt to clear.
On Wednesday, Blue Label once again announced it has used airtime to secure finance for the country’s struggling mobile phone operator.
Blue Label Telecoms announced on Tuesday that Cell C procured R1.4 billion of funding and did’nt provide any further details.
However, the JSE-listed company on Wednesday disclosed that the funding has been procured from a consortium of financial institutions for a tenure of 12 months, secured by airtime to the value of R1.75 billion.
“In the event of default, TPC has undertaken to purchase such inventory from the consortium on a piecemeal basis over a specified period that has been agreed upon,” Blue Label Telecoms said in a JSE statement.
“Any shortfall of this purchase would be in lieu of purchases made from Cell C within that period. The payment terms as between TPC and Cell C on the normal Cell C trading account would be extended by 120 days, ensuring that TPC will not be at any risk of having to purchase airtime in excess of its monthly requirements.”
The use of airtime to conclude transaction seems to be gaining traction between Cell C and Blue Label Telecoms.