Communications regulator Icasa has found that Cell C followed due process during its recapitalisation, under which the JSE-listed firms Blue Label Telecoms and Net1 UEPS Technologies invested R7.5bn, the mobile operator said on Wednesday.
On 31 August, Icasa issued a statement saying Cell C may have failed to make the correct regulatory filings regarding the transaction.
Icasa said it appeared there had been non-compliance with “legislative provisions” and was “taking external legal advice on the matter, including on appropriate enforcement actions it can take to ensure compliance”.
“The authority has considered the notification and the preliminary view is that the Cell C recapitalisation transaction — on the face of it — triggers the provisions of section 13 of the Electronic Communications Act of 2005 and ought to have been filed as an application for change of control of the licensee,” Icasa said at the time.
Icasa’s move against the deal came days after Cell C’s black economic empowerment partner, CellSAf, again hit out at the recapitalisation, saying the restructuring was “non-compliant” and faced a number of “legal and regulatory hurdles”.
“Faced with regulatory and public scrutiny, the true motives and beneficiaries of the proposed transaction will be revealed. These revelations, combined with a series of violations of Cell C’s licence conditions and several South African laws and regulations, will likely capsize the deal, leaving its backers to rehabilitate their reputations and CellSAf to pick up the pieces at Cell C,” CellSAf said in a statement on 23 August.
Investigation
It alleged the recapitalisation did not comply with various provisions of the Companies Act, the Electronic Communications Act and the Competition Act.
“The sponsors of the transaction have not complied with the mandated regulatory processes relating to changes in control of a licence, and they are therefore in breach of the specific requirements, regulated by Icasa,” CellSAf said.
Blue Label said previously that it had “disclosed everything that was required” of it in its various statements issued via the JSE’s stock exchange news service and in circulars to shareholders.
On Wednesday, Cell C said it welcomed “Icasa’s confirmation that it followed the correct process in the notification of its recapitalisation transaction and that it has complied with all applicable regulations”.
“A recapitalised Cell C is good for the industry, the economy and the consumer at large,” said CEO Jose Dos Santos. “The successful conclusion of this transaction has ensured a sustainable future for the company and its employees. We now have a solid foundation to really drive competition in an industry that has been marred by a duopoly at the expense of the consumer.” — (c) 2017 NewsCentral Media
