The last time we checked in on Cell C, it was facing some serious financial issues, but there was still some hope.

Blue Label Telecoms was looking to turn things around by making some drastic changes to operations and striking a deal with The Buffet Consortium.

That was back in March, and it doesn’t look like things have improved much since then. In fact, they seem to be getting worse.

Over to MyBroadband:

Cell C is in deep financial trouble and was forced to delay its debt payments and hire consultants to probe its business practices.

So severe are the company’s problems that its interim CEO Douglas Craigie Stevenson detailed the challenges in an open letter.

Stevenson also unveiled a turnaround plan which includes a recapitalisation programme, extracting greater value from its roaming agreement and optimising its network revenue and usage.

You can read that open letter here.

Stevenson has hired Bowmans Attorneys to “investigate any parts of the business where we suspect that there may be irregular business practices”.

Following these revelations, the company saw a steep decline in Cell C shareholder Blue Label Telecoms’ share price. Insiders are now convinced that the problems at Cell C are big enough to bankrupt the company.

Stevenson admitted that the company is facing severe financial and other challenges, which are four-fold:

1. Debt – Cell C’s debt has gone up more than anticipated since the recapitalisation of 2017.
2. The cost of debt – Cell C is paying a substantial premium on the cost of its debt.
3. Liquidity problems – Cell C is battling with liquidity because of some of the events around the payment of large tranches on coupons.
4. Poor business performance – Cell C’s business performance has not been optimal.

The deal with The Buffet Consortium is also still in the mix, through which they hope to get their debt at a cheaper rate than what they are currently paying.

That said, insiders also revealed that this isn’t the first time that Cell C has tried to implement a turnaround plan. Previous plans have clearly failed.

Those same insiders cite four main areas where Cell C has dropped the ball – high interconnect rates, bad management and shareholders, declining voice revenues, and high roaming charges.

When asked about their current situation Cell C said the following:

Cell C said discussions with its shareholders, financial lenders and various stakeholders are ongoing.

“Cell C is actively pursuing liquidity, recapitalisation and operational initiatives to ensure that we remain competitive,” it said.

“We are using our best efforts to be a strong participant in the industry and I firmly believe we are on the right track to achieve this. We have a new management team and a clear business plan.”

They are actively pursuing a simplified business plan, but the fact remains that they’re in really hot water, and it doesn’t look good going forward.

[source:mybroadband]