Notes to the Group Annual Financial Statements | Note 2.2

BLT holds 49.53% (2024: 49.53%) of the shareholder voting rights of Cell C and is able to appoint four out of 12 representatives on the Cell C Board of Directors, where each director has one vote. It has been determined that the Cell C Board makes the decisions about the activities that significantly affect the returns of Cell C (the relevant activities).

As a result of loans made by TPC to SPV1 and SPV4, as of 31 May 2024, TPC was entitled to obtain additional shares comprising 13.66% in aggregate in Cell C at any time from the SPVs in settlement of the loans.

The Group's external legal advisers have advised that TPC can only lawfully acquire additional shares which would give it the majority of the voting rights in Cell C with the prior approvals of the Competition Commission and the Independent Communications Authority of South Africa ("ICASA") and that it is unlawful to give effect to a transaction that requires the approval of the Competition Commission before such approval is granted, and doing so could result in the transaction being set aside. ICASA approval for TPC to acquire control of Cell C's telecommunications licences was granted on the 24 January 2025. As at the 31 May 2025, Competition Commission approval is still outstanding, the granting of which is not a formality or within TPC's control, hence TPC does not, on its own, have the practical ability to obtain any additional shares (and voting rights) in Cell C. Therefore, management has concluded that TPC's rights under the SPV4 and SPV5 loan agreement to obtain 10.47% and 10% respectively of Cell C shares at any time are not substantive until Competition Commission approval has been granted.

The voting rights attached to the 20.47% economic interest in Cell C are held by SPV4 and SPV5. Even though TPC bears the economic risks and rewards of these shares (subject to upper limits of the amounts repayable under the loans), it does not have the ability to direct the way in which the corresponding voting rights in Cell C are exercised. These decisions lie with the Directors of SPV4 and SPV5, which are appointed by Albanta Trading 109 Proprietary Limited (Albanta), over which BLT has no control.

Although the SPVs will only benefit from the aggregate 20.47% equity interest in Cell C to the extent that they realise more than the amounts repayable to TPC under the loans, whether they exercise their Cell C voting rights in line with the way that TPC exercises its 49.53% Cell C voting rights or not, management is of the view that this would not affect the SPVs in any way. Similarly, whether the SPVs vote in line with TPC or not, management is of the view that this would have no impact on whether TPC elects to obtain the additional shares in settlement of its loans, subject to receiving Competition Commission approval. Since management is of the view that the SPVs do not have any incentive to exercise their Cell C voting rights in the way that TPC would want them to such that TPC can rely on them to do so, it has been concluded that the SPVs are not de facto agents of TPC. Furthermore, Albanta holds other shares (5.50%) in Cell C, therefore management believes that Albanta would exercise all its Cell C voting rights in the same way and management is of the view that there is no incentive or reason why Albanta would necessarily vote in line with TPC.

Based on historical attendance at Cell C shareholder meetings, the fact that the shares of Cell C are not widely held (there are only nine shareholders currently; seven if one recognises that SPV4 and SPV5 are subsidiaries of Albanta), and that Gramercy and Nedbank now hold 6.09% and 7.53% of Cell C, respectively, management is of the view that there is currently no basis for concluding that TPC has de facto control of Cell C at a shareholder level. Furthermore, it is the Memorandum of Incorporation (MOI) of Cell C that enables TPC to appoint only four of the 12 directors, and changes to the MOI require shareholder approval of at least 82% including that of Gramercy and Nedbank, for as long as they are permitted to appoint a director to the Cell C Board. Therefore, even if TPC had de facto control at a shareholder level, it could not, on its own, change the MOI to enable it to appoint the majority of the Directors. Management has thus concluded that the Group does not have control over Cell C and continues to exercise significant influence. Therefore, the Group continues to account for Cell C as an associate.

(b) Assessment of investment in Cell C

Valuation of Cell C and impairment reversal.

The improved outlook of Cell C indicated to management that the previous impairment of Cell C should be reversed. An internal valuation was performed in order to determine the value-in-use of Cell C based on cash flow projections incorporated in its five-year business plan. Assumptions relating to the business, the industry and economic growth were applied. Cash flows beyond this point were then extrapolated, applying terminal growth rates. The discount rates used are pre-tax and reflect specific risks related to Cell C.

The value-in-use of Cell C as at 31 May 2025 equated to R4.686 billion, of which TPC's share amounted to R3.280 billion. Of the initial impairment of R2.521 billion recognised on TPC's investment in Cell C as at 31 May 2019, R962 million was reversed in November 2022. The remaining balance of R1.559 billion was reversed during the current financial year and recognised as a reversal of the impairment of investment in associate.

The recoverable amount was calculated using the principles of IAS 36, reversing previous impairment losses recognised, and, in accordance with the rules of IAS 36, may not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. Furthermore, the recoverable amount calculated does not take into consideration the proposed capital restructuring of Cell C post-year-end, as these transactions remain subject to, among other conditions, approval by the boards of Blue Label and Cell C, requisite shareholder and regulatory consents, and favourable market conditions.

The key assumption applied in determining the value-in-use calculation as at 31 May 2025 is as follows:

The recovery in value is primarily attributable to the following factors:

a. a reduction in the discount rate, driven by a decline in both the risk-free rate and the South African Prime lending rate;

b. improved performance and outlook for Cell C, which has eliminated the need for a distress factor overlay; and

c. lower forecast capex aligned with Cell C's asset-light strategy.

(c) Going concern of Cell C

For purposes of the Group's annual financial statements, Cell C has been accounted for using the going concern assumption.

Management is of the opinion that Cell C will continue as a going concern for the foreseeable future and has considered the restructuring of liabilities (recapitalisation in 2022), the infrastructure-asset light model, the strategic and operational positioning in the successful renegotiation of key service agreements and IT support, the enhanced senior executive management team, the continued focus on operational efficiencies, reduced operational expenditure, the optimisation of traffic and the implementation of a fixed cost infrastructure. In addition to the factors listed, management has proposed a further restructuring which includes:

• Airtime asset transfer: TPC will transfer airtime currently included on its Statement of Financial Position to Cell C in exchange for newly issued additional equity in the Cell C.
• Debt-to-equity conversion: TPC's outstanding debt claims against Cell C will be capitalised and converted into equity, further reducing Cell C's leverage.
• Acquisition of CEC: Cell C will acquire 100% of CEC from TPC in exchange for additional shares in Cell C. CEC is responsible for Cell C's postpaid offerings. The internalisation will enable Cell C to assume full responsibility over its postpaid customer base, including oversight of supply chain, commercial operations, marketing, billing, credit, and collections.

The proposed restructure is expected to encompass various ancillary transactions, aimed at optimising Cell C's capital structure and deleveraging its Statement of Financial Position in preparation for a potential separation and future listing on the JSE. The implementation of the restructure and potential listing will remain subject to, among other conditions, approval by the boards of Blue Label and Cell C, requisite shareholder and regulatory consents, and favourable market conditions. Further details of the proposed restructure will be communicated once this workstream has been sufficiently progressed.

Overall, the restructure is intended to streamline operations, improve financial sustainability by reducing debt and resultant cash injection to facilitate the funding of Cell C's strategic objectives. This is expected to further enhance Cell C's strategic readiness for long-term growth and potential listing

Taking into account the latest available financial information and estimated future cash flows, the continued use of the going concern assumption for Cell C is assessed as appropriate.

(d) Exposure to Cell C

The Group's exposure to Cell C is as follows:

There is indirect exposure to Cell C as a result of the subscription sharing arrangement and inventories held.

Summarised statement of financial position of Cell C

Summarised income statement of Cell C