The shares of JSE-listed technology group Blue Label Telecoms fell by as much as 15% in early trade on Thursday, as concerns around the latest development in the mobile phone operator Cell C battered sentiment.
By 1136 am, Blue Label Telecoms was down 10.3% at R3.50 pushing the company’s market cap to R3.5 billion. The company’s shares have dropped 27% year-to-date and fell 17% in the past 30 days.
Blue Label Telecoms owns 15% in Cell C, which has been a drag on its share performance.
On Wednesday, it emerged that Cell C’s management has finally accepted (publicly) that the company faces financial and other challenges.
The struggling mobile phone operator is planning to implement a new business plan which will simplify its business model, which will include a second recapitalisation of the company.
Cell C has R8.9 billion in debt and attempting to secure new funding from a consortium of investors known as The Buffet Consortium.
For now, it seems the market is not convinced and Blue Label Telecoms shares are negatively hard hit by the news.
TechFinancials has since 2014 argued that Cell C was really struggling to survive financially as a third mobile operator and will remain too weak to compete and too small to revolutionise the South African telecoms market.
TechFinancials has also been at the forefront of disclosing the challenges and scandals faced by Cell C.
The company has appointed Deloitte as independent financial restructuring advisors, and Bowmans attorneys to “investigate any parts of the business where we suspect that there may be irregular business practices”.
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