By Khuleko Siwele.
South African mobile-network operator Cell C Holdings opened flat in its debut on the Johannesburg Stock Exchange, with the continent’s top bourse on track for its best year for funds raised from initial public offerings since 2017.
The stock opened at R26.50 on Thursday, matching the final offer price, and rose to R27.30 by 9:44 a.m., giving the telecommunications company a market value of R9.3 billion ($543 million). The long-awaited listing marks the firm’s first day trading as an independent business after years under Blu Label’s ownership structure.
The listing is the “natural evolution” of Cell C’s 24-year journey and gives the carrier access to capital markets for the first time in its history, Chief Executive Officer Jorge Mendes said.
“We’ve cleaned up the balance sheet, we’re debt-free and on the front foot for the first time,” Mendes said in an interview ahead of the listing. “This is a strong, cash-generative, capex-light business with significant growth ahead.”
The company expects growth across its prepaid, postpaid, enterprise and wholesale channels, supported by its fast-expanding network of retail stores and mobile virtual network operator partnerships that include offerings from lenders such as Capitec Bank Holdings, FirstRand’s First National Bank, and retailer Shoprite Holdings.
Cell C’s asset-light network model — which uses long-term roaming and multi-operator arrangements with MTN Group and Vodacom Group — enables the carrier to offer what he described as “the best of both networks” while avoiding heavy capital expenditure.
The company had intended to raise gross proceeds of about R7.7 billion in an offer to prospective investors, but got about R2.7 billion, it said Monday.
While some investors have approached the IPO cautiously, citing the complexity of Cell C’s restructuring, Mendes said the market is taking a “wait-and-see” approach as the company transitions to a clean set of comparable financials over the next 18 to 24 months.
“There’s huge value in this asset,” he said. “We have a clear strategy and a business that will deliver growth. I’m excited to showcase that in the public markets.”
Cell C’s listing comes after a significant restructuring that converted debt to equity and cut the company’s leverage. Blu Label acquired a 45% stake in Cell C for R5.5 billion in 2017 during another restructuring process and further boosted its interest after a recapitalisation at the end of 2022.
Blu Label will remain Cell C’s biggest shareholder.
With artificial intelligence-driven financial technology firm Optasia Group’s listing earlier this month and Cell C’s debut, the Johannesburg Stock Exchange is on track for its best year for funds raised from IPOs since 2017, according to data compiled by Bloomberg.