Cell C Holdings Limited (JSE: CCD) cut net debt by 64.5% to R2.02 billion in FY26 while revenue increased 13.5% to R12.64 billion, giving the recently listed South African mobile operator a materially stronger financial base as it moves from restructuring into growth. Adjusted EBITDA increased 16.9% to R2.38 billion, net profit after tax rose 87.6% to R4.16 billion and headline earnings per share climbed 57.4% to 2,337.6 cents.
The operating indicators were also broadly positive. Total subscribers rose 17.1% to 8.884 million, while mobile virtual network operator Home Location Register subscribers increased 27.3% to 5.713 million. Data traffic jumped 47% even as voice traffic declined 4%, illustrating the continuing shift in usage toward mobile data.
Cell C shares nevertheless closed at R26.00 on August 21, down 2.99% following the audited results. The muted response suggests that investors are looking beyond the dramatic year-on-year earnings percentages toward the durability of revenue growth, regulatory headwinds and the cash returns available after the company’s balance-sheet restructuring.
How much has Cell C’s balance-sheet restructuring changed the business?
Net debt fell from R5.69 billion to R2.02 billion, a reduction of approximately R3.67 billion in a single year. Leverage improved to 1.56 times from 4.29 times, while total debt at year-end stood at R2.153 billion, including R802 million of lease liabilities.
That change is arguably more important to Cell C’s investment case than the headline 161.8% increase in IFRS EBITDA. A telecom operator carrying materially less debt has greater flexibility to fund network-related investment, compete on pricing and withstand regulatory changes without directing as much operating cash toward financing obligations.
The company completed its restructuring and initial public offering during the first half of FY26 and integrated Comm Equipment Company during the second half, restoring control of the postpaid operation. Cell C characterised the year as moving from financial restructuring toward operational execution.
Where did Cell C’s 13.5% revenue growth actually come from?
Prepaid remained the largest growth contributor, with net revenue increasing 9.7% to approximately R5.8 billion and the prepaid subscriber base expanding by 1.3 million. Postpaid service revenue increased only 1.2% to R2.3 billion, although average revenue per user improved to R242 from R225 as the company cleaned up its customer base and integrated Comm Equipment Company.
Wholesale was another standout, with revenue rising 20% as Cell C expanded its mobile virtual network operator ecosystem. The company supported more than 5.7 million MVNO subscriber lines at year-end, giving the asset-light network strategy a second growth channel beyond customers carrying Cell C’s own retail brand.
This mix is important because Cell C is competing against much larger South African operators without attempting to replicate their network-ownership models asset for asset. Its strategy depends on extracting commercial growth from partnerships, wholesale relationships and customer propositions while keeping capital intensity comparatively disciplined.
Why should investors focus on adjusted EBITDA rather than the 162% IFRS jump?
Cell C reported IFRS EBITDA of R5.51 billion, up 161.8%, but adjusted EBITDA increased a much more moderate 16.9% to R2.38 billion. The adjusted number therefore provides the more conservative view of recurring operational progress during a year affected by restructuring and corporate changes.
On revenue of R12.64 billion, adjusted EBITDA represents a margin of approximately 18.8%, compared with roughly 18.3% using the prior-year adjusted EBITDA and revenue figures. The improvement is therefore real but far less dramatic than the headline IFRS EBITDA percentage might suggest.
Operating cash flow of R1.056 billion and cash capital expenditure of R810 million also show why cash generation deserves attention alongside accounting earnings. Cell C still has to invest in customer experience and technology while maintaining the low-capital-intensity characteristics central to its strategy.
Can Cell C sustain growth as new telecom regulations take effect?
Management expects FY27 revenue to grow in the upper single-digit range despite a challenging regulatory environment. Prepaid is expected to remain a major contributor, postpaid should benefit from a full year of Comm Equipment Company integration and wholesale revenue is expected to continue growing at a double-digit pace.
The counterweight is regulation. Cell C expects lower interconnect tariffs to continue affecting other revenue, while implementation of data-rollover rules in January 2027 is expected to weigh on second-half growth. The termination-rate glide path creates an additional headwind.
Those pressures make the 47% increase in data traffic strategically encouraging but financially incomplete. Rapid data consumption only creates shareholder value if Cell C can monetise that traffic at attractive unit economics while maintaining service quality.
Why did Cell C leave shareholders without an FY26 dividend?
The board did not approve a dividend for FY26, consistent with guidance provided at the initial public offering. That decision fits a company only months removed from a major restructuring and still establishing what its sustainable post-listing cash-generation profile looks like.
For investors, the absence of a payout also sharpens the next phase of the equity story. The balance-sheet repair has largely been accomplished, leverage has fallen dramatically and adjusted earnings are growing. The question is when those improvements will produce sufficient recurring free cash flow for management to balance reinvestment with shareholder distributions.
Cell C’s first audited annual result as a listed company therefore provides genuine evidence of financial rehabilitation. The 2.99% share-price decline shows that the market is not rewarding rehabilitation alone; investors now want proof that the stronger balance sheet can support sustainable growth through an increasingly competitive and regulated South African telecom market.
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