On Tuesday, August 4, 2020, Blue Label Telecoms announced that mobile carrier, Cell C, has defaulted on the payment of capital on its $184 million bond which was due on August 2. The company has however maintained that it will work proactively with all stakeholders to improve its liquidity, debt profile, and long-term competitiveness as part of a turnaround strategy.

Lenders have suspended actions against the mobile carrier to afford it more time for commercial growth. This is as a result of what Blue Label regards as “good progress” in a complex recapitalization exercise ongoing in the company.

The network operator has been experiencing a financial and organizational crisis for some years. In 2019, the Board of Directors appointed a new CEO, Douglas Craigie Stevenson, with a clear mandate to right-size and optimize the business.

In a statement, Stevenson said there was a belief in long-term prospects for Cell C and that the new leadership team is focused on the journey to turn the company into a profitable, innovative player in the local telecoms industry. He added that the leadership is confident the organization will overcome its challenges.

Blue Label Telecoms is a major shareholder in Cell C. The company has been quoted in a report to have said that while a new recapitalization is being negotiated, there is an informal debt standstill for Cell C and debt payments have been suspended. It added that the non-payment is not a surprise to lenders that understand the Cell C turnaround strategy.

Earlier in the year, the mobile carrier had also defaulted on interest and capital repayments related to the respective bilateral loan facilities. The defaulted repayments due in January and July 2020 were between itself and Nedbank Limited, China Development Bank Corporation, Development Bank of Southern Africa Limited and Industrial and Commercial Bank of China Limited.