Blue Label Telecoms (BLU) – Waiting to exhale

Blue Label’s “Back to basics” strategy is progressing well – debt has been paid down, commitments are unwinding and cash reserves are being replenished. Much is still dependent on the completion of the Cell C recapitalisation. The mobile operators have temporarily withdrawn credit lines pending the recap which is hampering the capital allocation decision. We remain sceptical of the yield potential of device financing through the CEC book given low interest rates and think that scaling of the electricity revenue assurance business will be more challenging than anticipated.