Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      The 1940s visionary who imagined the Information Age

      14 July 2025

      Trump tariffs could wreck South Africa’s vehicle manufacturing industry

      14 July 2025

      Microsoft South Africa to get new MD as Lillian Barnard moves to regional role

      14 July 2025

      Zuckerberg used open source to scale AI – now the lock-in begins

      14 July 2025

      South Africa begins complex job of overhauling media laws

      13 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Editor's pick » Blue Label to buy 35% of Cell C for R4bn

    Blue Label to buy 35% of Cell C for R4bn

    By Duncan McLeod10 December 2015
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Cell-C-640

    Blue Label Telecoms is acquiring 35% of Cell C, injecting R4bn in new capital as part of a major restructuring of the telecommunications operator that will lead to current controlling shareholder Oger Telecom diluting its stake from 75% to roughly 27%.

    The restructuring, details of which have been provided to TechCentral by Cell C CEO Jose Dos Santos and Blue Label co-CEO Mark Levy in a wide-ranging interview, will see Cell C’s debt reduced “significantly”, to less than R8bn.

    The target is to reduce the debt further over the next 12 months, according to Dos Santos, who has agreed to remain on as Cell C’s CEO for a period of at least five years.

    Oger Telecom has agreed to help reduce the debt significantly through the injection of fresh capital. The exact amount is not being disclosed, but it runs into many billions of rand.

    As part of the deal, Cell C employees will acquire a 30% stake in Cell C for R2,5bn. The money to pay for this will be raised through a financial institution and the debt will then be paid down through dividend flow from Cell C over a period of years.

    This R2,5bn in debt will form part of the R8bn (or less) in debt on Cell C’s balance sheet post the restructuring.

    Black economic empowerment partner CellSAf’s stake will be reduced from the current 25% to about 9% as part of the proposed restructuring.

    The news comes just weeks after Telkom walked away from making an offer to buy Cell C after concluding a due diligence investigation. A number of international operators, including Orange and TeliaSoneria are understood to have considered buying the company, which is South Africa’s third mobile licensee after Vodacom and MTN.

    Dos Santos told TechCentral that the biggest obstacle to putting Cell C on a new trajectory has been restructuring its high levels of debt. That has now happened, thanks to Oger Telecom agreeing to pay off a significant chunk of it.

    “The intention is to reduce the debt to R6bn over the next 12 months,” Dos Santos said.

    After the restructuring, the debt becomes 100% rand-based, he added. “Right now, 90% of the debt is dollar- or euro-based.”

    The restructuring plan has placed an enterprise value on Cell C of about R18,5bn.

    After the restructuring, 3C Telecommunications (CellSAf and Oger Telecom) will hold 35% of the equity, Blue Label a further 35% and staff and management the remaining 30%. After the deal’s conclusion, Cell C will not have a controlling shareholder.

    Cell C said its board and the board of 3C Telecommunications will now assess the offer from Blue Label (and from Cell C employees).

    “The restructuring is subject to conditions precedent, including the execution of agreements typical of a restructuring of this nature and the obtaining of all requisite regulatory approvals,” it said in a statement.

    Blue Label Telecoms co-CEO Mark Levy
    Blue Label Telecoms co-CEO Mark Levy

    Blue Label’s Levy said, meanwhile, that the reduced debt in Cell C of between R6bn and R8bn “makes it an interesting business to be part of”.

    He said Blue Label has “stress-tested some of the assumptions”, and ultimately believes that the transaction will be positive for Blue Label earnings and for shareholder wealth.

    In a statement, Blue Label said the expected effective date of the proposed transaction is 1 June 2016.

    A big question is whether owning a significant minority in Cell C will affect Blue Label’s relationship with MTN and Vodacom. The company is a big distributor of prepaid airtime for all three mobile operators.

    But Levy plays down concerns that the deal could affect Blue Label’s relationship with Vodacom and MTN.

    “We have no intention of breaching the contracts we have or breaking these relationships that we have developed for so many years,” he said. “Co-opetition” is commonplace around the world. “As management, we are quite happy we are able to separate our investment strategy from driving business on a day-to-day basis. The operators should not view this as a negative thing.”

    Blue Label will settle the R4bn it’s paying for the Cell C stake through a mix of cash and some borrowings, which it has already secured. “We are in a good position to afford such a transaction without damaging the core business,” Levy said. “It is not overly material in terms of the borrowings, and we also have a lot of our own cash.”  — © 2015 NewsCentral Media



    3C Telecommunications Blue Label Telecoms Cell C CellSAf Jose dos Santos Mark Levy MTN Oger Telecom Orange TeliaSoneria Vodacom
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleMarkets tank as Zuma sacks Nene
    Next Article #ZumaMustFall gains momentum on social media

    Related Posts

    Blue Label Telecoms to change its name as restructuring gathers pace

    11 July 2025

    Spam call epidemic: operators say their hands are tied

    10 July 2025

    Vodacom, Maziv deal now looks likely after CompCom U-turn

    8 July 2025
    Company News

    Banking on LEO: Q-KON transforms financial services connectivity

    14 July 2025

    The future of business calling: Voys brings your landline to the cloud

    14 July 2025

    How digital twins and AI are shaping the future of security

    14 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.