JSE-listed Blu Label Unlimited has taken a massive R4.9 billion full-year loss after having to write down its Cell C stake because of the gap between the paper value and what investors say the operator is worth.
Blu Label Unlimited – or BLU – says net income swung to a loss, a 297% year-on-year decline, due to an accounting move following BLU marking down its stake in Cell C after the mobile operator’s initial public offering came in at R9 billion; an amount that is less than what BLU was carrying on its books.
In its Stock Exchange News Service announcement this morning, it says its “defining milestone” for the year was successfully restructuring and spinning out Cell C through a listing.
Brett Levy and Mark Levy, joint-CEOs, say 2026 was “a transformational year for Blu Label”. Having “materially” simplified its balance sheet and investment case, it can now “direct its full attention towards the platforms where we have scale, proven capability and clear opportunities to generate cash and compound value”.
Paper cut
BLU’s separate listing of Cell C last November de-risked its exposure to the mobile operator, which it had written down to zero after its initial R5.5 billion purchase in 2017 and a subsequent R1 billion injection, while also enabling it to streamline its operations, giving investors better insight into its earnings.
As of 8am this morning, an hour after BLU published its results, the company’s stock price had gained 0.24% to R8.32 before dropping 3.97% to R7.99. BLU’s market cap is now R7.3 billion, while Cell C is currently worth R8.7 billion.
However, stripping out the accounting move for the year to May, the company reported net profit after tax of R677 million, which translated into core headline earnings of 75.33c a share from revenue of R9.4 billion.
The company also announced a dividend of 10c a share and says it has started buying back its own shares, leaving existing shareholders with a bigger slice of the company.
Show me the money
BLU says it is “committed to returning capital to shareholders” and adopted a formal dividend policy on 25 August. Under this policy, it targets a total annual payout to shareholders of between 30% and 50% of its core headline earnings, stripping out any earnings from its remaining 49.53% stake in Cell C.
This distribution, it explains, could take the form of dividends or share repurchases, or a combination of both. Including its interim dividend, the company paid out 53.56c a share for the year.
BLU paid its first dividend in eight years after spinning out Cell C, declaring an interim dividend of 43.56c a share for the six months to November, reflecting what it calls “confidence in the group’s financial position, cash generation and sustainable earnings outlook”.
In addition to these payouts, BLU says it will distribute between 50% and 70% of any dividends it earns from its stake in Cell C, either through dividends or distributing Cell C shares of the same value.
Ahead of listing the mobile operator, BLU said that it might use some of the proceeds to buy back shares or pay dividends, both of which return value to shareholders. The company also indicated that another option would be to pay down debt.
Beyond Cell C
Blu Label is increasingly focusing on businesses that provide everyday services, including payments, financial services, data and energy. In the year ahead, it plans to focus on generating cash, keeping debt and other financial commitments manageable, growing these businesses and being careful about where it spends its money.
The company, which dates back to 2001 when the Levy brothers started selling car radios from their vehicle’s boot, has also restructured its operations into seven ‘buckets of solutions’ that combine physical and virtual distribution capabilities with an integrated digital ecosystem.
During the 2026 year, its Blu Energy unit secured a multi-year energy trading licence from the National Energy Regulator of South Africa. This enables it to deliver renewable energy solutions across the energy value chain by connecting municipalities, independent power producers and energy users, ensuring energy supply for local communities.
This, BLU says, supports its operational objectives and the unit’s long-term growth targets.
“Our priorities for the year ahead are straightforward: generate cash, allocate capital with discipline and execute against the opportunities already in front of us,” the Levy brothers say in a statement.
Mark and Brett Levy add: “Blu Label’s scale, procurement strength, data capability and distribution reach give us a strong base from which to navigate a difficult consumer environment and build sustainable shareholder value.”
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