Blue Label to acquire 35% stake in Cell C for ZAR4bn

11 Dec 2015

South African wireless operator Cell C is to undergo a major restructuring process, following the inking of an agreement between Blue Label and Cell C’s current majority owner Oger Telecom for the sale of a 35% stake in the South Africa’s third largest cellco by subscribers, TechCentral writes. The transaction is expected to take effect from 1 June 2016, subject to customary regulatory approvals.

According to TeleGeography’s GlobalComms Database, Cell C is wholly owned by holding company 3C Telecommunications, which is itself owned by Oger Telecom South Africa (60%), Black Economic Empowerment [BEE] entity CellSAf consortium (25%), and Lanun Securities (15%). Saudi Arabia-based group Oger Telecom is the sole shareholder in Oger Telecom South Africa and Lanun Securities, giving it an overall 75% indirect stake in Cell C.

Under the agreement, Blue Label will provide ZAR4 billion (USD256 million) in new capital, thus significantly reducing Cell C’s current debt. As part of the deal, Cell C employees will acquire a 30% stake in the operator for ZAR2.5 billion (the funding is to be raised through a financial institution), while CellSAf’s stake will be reduced to 9%. Following the conclusion of the deal, 3C Telecommunications (CellSAf and Oger Telecom) will hold 35% of the cellco’s equity, Blue Label will own 35%, while Cell C’s staff and management will be in charge of the remaining 30%. Cell C’s CEO Jose Dos Santos – who has agreed to remain as company CEO for a period of at least five years – disclosed that after the restructuring is finalised, Cell C’s debt will be 100%-rand based. Going forward, the company is aiming to reduce its debt to ZAR6 billion over the next twelve months.

South Africa, Cell C, Oger Telecom