The proposed separate listing of Cell C, South Africa’s fourth-largest mobile operator, on the Johannesburg Stock Exchange (JSE) could mark a pivotal moment for the debt-laden telco.
It has potential to cut its liabilities, while enhancing brand credibility and corporate accountability.
This is according to analysts reacting to the recent announcement that Blue Label Telecoms is exploring a JSE debut for Cell C as part of a broader restructuring plan.
Blue Label, already Cell C’s largest shareholder with a 49.5% non-controlling stake, is seeking to secure full control by acquiring an additional 4.04% via its subsidiary, The Prepaid Company.
In a cautionary statement issued today, the JSE-listed firm advised investors to tread carefully when trading its shares, saying it is considering “various strategic options and initiatives” to unlock value.
Ofentse Dazela, director of pricing research at Africa Analysis, says a JSE listing for Cell C, together with majority shareholder Blue Label, could unlock significant equity capital.
“This would enable Cell C to enhance its coverage through expanded roaming agreements, reduce its debt burden without relying exclusively on loans and strengthen its balance sheet.
“In turn, this would create scope for expansion into new markets and the development of new products. Furthermore, the JSE’s stringent disclosure and governance requirements would promote improved internal processes, operational discipline and investor confidence,” says Dazela.
Blue Label has already committed to settling R175 million of Cell C’s debt by December 2026.
“A listing could provide Cell C with the financial and reputational leverage needed to narrow the competitive gap,” Dazela adds.
“The additional capital would allow it to reduce debt, improve coverage and quality through broader roaming agreements, and enhance the customer experience – areas where it has historically lagged.
“Moreover, the transparency and governance associated with being a listed entity could make Cell C a more attractive prospect for global telecommunications players that might consider strategic investment in the company.”
He says one potential downside of listing is increased exposure to share price volatility. “The company’s valuation could be affected by broader market sentiment, currency fluctuations, or sector-wide downturns, even if its core operations remain fundamentally sound.”
Converting debt into equity
Arthur Goldstuck, MD of World Wide Worx, believes the move will test whether the market buys into Cell C’s turnaround story.
For Blue Label, he says, it’s a chance to let investors judge Cell C on its own merits, separate from its distribution business. However, he notes that the financial upside is the real driver.
“A separate listing would strengthen Cell C’s financial structure by converting debt into equity and streamlining operations. It would also set the stage for clearer investor evaluation and better access to capital. For Blue Label, it unlocks shareholder value by allowing markets to assess Cell C independently of the distribution business.”
Goldstuck adds that while a standalone listing could improve transparency and agility, Cell C still faces tough competition.
“Cell C still holds a smaller market share and operates on an asset-light model via roaming agreements, so success would be both long-term and dependent on its ability to achieve sustained differentiation on pricing or service, as well as effectively leveraging new capital.”
Peter Takaendesa, chief investment officer at Mergence Investment Managers, says the listing could benefit Blue Label – or “Blu” as per its proposed name change – if the market assigns an attractive valuation to Cell C shares.
However, he cautions that the telco itself may see little benefit unless the listing raises fresh capital.
Takaendesa notes that balance sheet restructuring ahead of the listing could further reduce debt, but the real question is whether Cell C’s performance will be sustainable this time, given past recapitalisation challenges.
On whether the listing will improve competitiveness against Vodacom, MTN and Telkom, Takaendesa says: “I don’t think the listing itself will help Cell C compete better, but a stronger balance sheet from the restructuring and continued growth in the MVNO [mobile virtual network operator] offering should help, although the direct-to-consumer part of Cell C is likely to remain challenging given tougher competition from Telkom in the value space and MTN SA likely to fight back to regain lost market share.”
Building investor trust
Christopher Geerdts, MD of BMIT, says Cell C’s long-standing debt burden has been its biggest constraint.
“In spite of these challenges, Cell C has built a solid customer base, while its strategy of actively courting MVNOs was important in growing revenue. However, the debt that Cell C accumulated in its early years has been an ongoing constraint.”
Still, he sees clear advantages in a listing. “The most important benefit is to provide Cell C with improved ways to raise capital, to reduce debt, clean up its balance sheet and invest in its growth strategy.
“Greater access to capital and the ability to reduce debt through equity swaps is fundamentally important,” Geerdts says.
He adds that public listings bring transparency and governance standards that help build investor trust, while increased analyst coverage and media attention could strengthen Cell C’s brand in consumers’ eyes.
A listing, Geerdts notes, would also make it easier for investors to buy into or exit the company, potentially making it more attractive.
“Cell C can also develop BEE [black economic empowerment] and staff incentive schemes through share structures which can assist with compliance and help retain critical talent over the longer term. As a standalone entity, separate from Blue Label, Cell C will be able to focus on its own core business, whilst shareholders can gain greater transparency on the real value of the business.”
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