South Africa’s third-largest mobile operator Cell C on Tuesday posted strong financial results for the year ended December 31, bolstered by the R5.5-billion recapitalisation programme led by JSE-listed Blue Label last year.

The recapitalisation, which resulted in Blue Label earning a 45% stake in the mobile operator, involved several companies, an employee and management shareholding scheme and a further subscription from Net1 for R2-billion, and reduced Cell C’s debt from nearly R18-billion to R6.8-billion.

“The recapitalisation of Cell C last year has really allowed us to create a strong foundation for the business. Our plans now are to build out this strategy and really accelerate our growth and investment going forward,” said Cell C CEO Jose dos Santos during a media presentation on Tuesday.

The transaction had generated a healthy and sustainable balance sheet for the business, boosting Cell C’s years-long turnaround strategy.

Unpacking the group’s year-end financial results at Cell C’s headquarters, CFO Tyrone Soondarjee noted that net profit surged 660% to R4.1-billion during the 2017 financial year, a significant turnaround on the profit of R541-million reported in the prior year.

In the seven-month period prior to the recapitalisation, the company fell into the red with a loss of R1.86-billion, before being boosted by a profit of R5.98-billion in the five months following the deal.

Cell C achieved earnings before interest, taxes, depreciation and amortisation (Ebitda) of R7.8-billion, benefiting from a one-off gain of R4.1-billion arising from the recapitalisation transaction and representing a 151% rise on the Ebitda of R3.1-billion posted in 2016.

Ebitda in the period from January to July 2017 reached R1.96-billion, rising to R5.83-billion in the final five months of the 2017 financial year.

Despite another tough economic year, Dos Santos said, Cell C increased its total revenue to R15.7-billion in 2017, a 7% increase on the R14.6-billion achieved in 2016.

Wholesale revenue increased by 79% to R717-million during the year under review.

Service revenue increased by 12% to R13.2-billion, attributed to a 29% increase in data revenue to R5.2-billion and a 90% increase in data use year-on-year.

Data revenue now made up 40% of service revenue, compared with 34% in 2016.

Voice revenue and the effective price of voice-per-minute both declined 4% in 2017.

Cell C’s total active subscribers increased 6% to 16.3-million, with active data customers increasing to 12.6-million.

While capital expenditure in 2017 contracted to R1.2-billion on the back of pre-recapitalisation funding constraints, Cell C plans to inject R3-billion into the business this year.

“We will invest significantly in our network over the next few years with an aggressive rollout of more long-term evolution-advanced sites,” Dos Santos commented.

Further, Cell C’s fibre division reported “excellent growth” and the company is in the process of making several acquisitions in this space.