We have audited the Consolidated Financial Statements of Blue Label Telecoms Limited (the Group) set out in the Consolidated Statement of Financial Position as at 31 May 2025, and the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended, and notes to the Consolidated Financial Statements, including material accounting policy information.
In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the Consolidated Financial Position of Blue Label Telecoms Limited as at 31 May 2025, and its Consolidated financial performance and Consolidated Cash Flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and the requirements of the Companies Act of South Africa.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group and company in accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of Financial Statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The ISAs recognise that:
The amount we set as materiality represents a quantitative threshold used to evaluate the effect of misstatements to the financial statements as a whole, based on our professional judgement. Qualitative factors are also considered in making final determinations regarding what is material to the financial statements.
In light of the above we utilised 2% of Revenue as the benchmark for assessing our materiality at R291,973,280. We have identified revenue as the most appropriate basis as we typically believe that profit-making companies are principally evaluated by users on their ability to generate revenue.
The main users of the financial statements will be investors, suppliers, banks, creditors, regulators and prospective investors. The materiality figure is determined for the principal users of the financial statements.
The users of the group financial statements will however place more focus on certain disclosure and account balances for which materiality is determined at a lower percentage being 75% of overall materiality.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
We considered the Group’s organisation or legal structure and its financial reporting processes when identifying components for purposes of planning and performing audit procedures.
In establishing the group audit scope, we considered those components which will be subject to further audit procedures and the scope of work to be performed at these components.
In determining which components will be subject to audit procedures, we considered whether these components are significant (due to risk or size), non-significant or inconsequential to the Group.
We conducted full scope audits on three components and specific scope audits on four components where our procedures were more focused or limited to specific accounts which we considered had the potential for the greatest impact on the significant accounts in the financial statements given the specific risks identified.
Analytical review procedures were performed over the remaining components that were non-significant and inconsequential to the Group.
We determined the type of work that needed to be performed by us, as the group auditor and component auditors from within the firm operating under our instruction. Where the work was performed by a component auditor, we determined the level of involvement we needed to have in the audit work at that component to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Consolidated Financial Statements of the current period. These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters in the current year include:
Reversal of impairment of investment in Cell C Limited
The Group’s investment in Cell C is assessed at each reporting period and when there is an indication that the investment may be impaired. The Group also assess at each reporting period whether the impairment loss recognised in previous reporting periods can be reversed.
If an indication of possible reversal is identified, management must estimate the recoverable amount of that asset. As at 31 May 2025, there was an indication that the impairment loss recognised in prior periods may no longer exist. Evidence, based on internal reporting sources indicated the economic performance of its investment is, or will be, better than expected. The events and circumstances that led to the reversal of the impairment loss has been disclosed in note 2.2.1. The Group calculated the recoverable amount of its net investment in Cell C which was based on value-in-use representative of its share of the present value of the estimated future cash flows expected to be generated by Cell C in its current position. With the assistance of management experts, the calculated recoverable amount resulted in a reversal of a previously recognised impairment loss amounting to R1.559 billion.
The reversal of the impairment loss does not exceed the carrying amount that would have been recognised had no impairment loss been recognised for the investment in prior years. The reversal of impairment also resulted in the group recognising its share of losses disclosed in note 2.1.1 in accordance with the requirements of IAS 28 Investments in Associates and Joint Ventures (“IAS 28”).
We have audited and agreed with the evidence presented by management as it relates to the indication that a reversal of the impairment loss previously recognised is appropriate. The calculation of the recoverable amount based on a value-in-use calculation as performed by management at the reporting date was reperformed by our valuation specialists. No material differences relating to the valuation has been identified.
The reversal of impairment was recalculated by the audit team using the outcome of the value-in-use calculation and the historical impairment schedule. We audited the significant inputs used by management, which included the growth rates, including the discrete growth rate assumptions to extrapolate cash flows, and the pre-tax discount rate used.
We also reviewed the relevant assumptions applied in determining the recoverable amount of the investment in Cell C. It’s an overarching principle of the value-in-use calculation that assumptions should be reasonable and supportable and in this respect, we carefully considered the risk factors present in the Group’s holding of the investment in Cell C. In particular, IAS 36 Impairment of Assets (“IAS 36”) requires the valuation to incorporate expectations around possible variations in the timing or amount of the cash flows and the price of bearing the uncertainty inherent in the investment. We assessed whether a distress overlay should be applied and the relevant assumptions taken into account by management in this regard.
We deemed the inputs and assumptions appropriate for the purposes of the valuation performed. In addition, we recalculated the stress tests performed by management, and considered whether the stress tests were sufficiently robust. The recoverable amount calculated by management at the reporting date was found to be appropriate and no adjustment was required.
The share of losses relating to the investment in Cell C were recalculated and no material differences were identified.
Change of economic interest in Cell C Limited
At the reporting date, the Group holds an economic interest in Cell C of 70%, this reflects a net increase of 6.81% as at the end of May 2024. The shareholding with voting rights remained unchanged at 49.53% for the current and comparative reporting periods. The control assessment over Cell C as performed by management remains unchanged and Cell C continues to be accounted for as an associate using the equity method as prescribed in IAS 28. The net increase in the economic interest of Cell C is made up of an increase of 10% due to its funding in SPV 5, and a divestment by SPV 1. The transactions as they relates to SPV5 and SPV1 respectively, are set out below.
The accounting treatment of the net increase of the economic interest and presentation and disclosure of the transactions in the annual financial statements have been assessed with the support of our financial reporting specialists. Our reporting specialists also assessed whether the control assessment performed by management remains appropriate in these circumstances. The increase in the percentage shareholding in Cell C to 70% was carefully considered to determine whether TPC controls Cell C after concluding these transactions. We specifically considered whether TPC has power of the investee by considering the board representation, and outstanding Competition Commission approval and all relevant facts and circumstances as disclosed in note 2.2.1 which could give TPC the practical ability to exercise power over Cell C. It was concluded that Cell C remains an associate for the reporting period as the criteria for control as per IFRS 10.7 were not met. We will continually assess the relationship between TPC, the Group and Cell C.
As it relates to the increase of 10% economic interest through SPV 5, our financial reporting specialists reviewed the proposed accounting treatment and disclosure of the increase in the economic interest, the derecognition of the loan commitment accounted for as a derivative at the interim reporting date, and the recognition of the loan advanced to SPV5.
Open and robust discussions with management were held where the positions taken by management were challenged and the accounting treatment of the SPV5 transaction, including the presentation thereof in the financial statements was accepted without material deviation.
The divestment of the shares in SPV1 and the resulting decrease in the economic interest was also assessed by our financial reporting specialists and the accounting treatment, including the presentation of the transaction in the financial statements have been considered as appropriate in accordance with the requirements of IFRS Accounting Standards.
The presentation and disclosure of the transactions in the Financial Statements were carefully considered so as to ensure the information is appropriately presented and complete, specifically as it relates to significant judgements made in applying the standards and the accounting policies of the Group.
The directors are responsible for the other information. The other information comprises the information included in the document titled “Blue Label Telecoms Limited Group Annual Financial Statements 2025”, which includes the Directors’ Report, the Report of the Audit and Risk Committee and the Certificate by the Company Secretary, as required by the Companies Act of South Africa, which we obtained prior to the date of this auditor’s report and the other sections of the document titled “Blue Label Telecoms Limited Integrated Annual Report 2025”, which is expected to be made available to us after that date. The other information further comprises the Shareholder Analysis on Annexure A: Shareholder analysis. The other information does not include the consolidated financial statements and our audit report thereon.
Our opinion on the Consolidated Financial Statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the Consolidated Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Consolidated Financial Statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The directors are responsible for the preparation and fair presentation of the Consolidated Financial Statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Consolidated Financial Statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Consolidated Financial Statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We communicate with the directors regarding, amongst other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the Consolidated Financial Statements of the current period and are therefore the Key Audit Matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that SizweNtsalubaGobodo Grant Thornton Inc. has been the auditor of Blue Label Telecoms Limited for three years.
Engagement Director
Registered Auditor
27 August 2025
152 14th Road
Noordwyk
Midrand
Gauteng
BLU Label Unlimited Integrated Annual Report 2025
