Net1 UEPS Technologies, the company whose subsidiary Cash Paymaster Services (CPS) manages the payment of welfare to 17m South Africans under a controversial tender, is acquiring a 15% stake in Cell C.
The deal, hinted at earlier this week when Blue Label Telecoms, which itself is buying 45% of the mobile operator for R5,5bn, said a third party was buying the 15% stake for R2bn.
It’s now been confirmed that the party concerned is Net1.
At the same time, Net1 has announced plans to buy 49,6% of DNI-4PL Contracts, with an option to acquire a controlling stake in DNI in the future. DNI is a distributor of mobile subscriber starter packs for Cell C and also distributes prepaid airtime through a network of field operatives and agents.
“The proposed investments in Cell C and DNI are subject to certain conditions, including the satisfactory completion of due diligence, the required internal and external approvals and the execution of definitive transaction agreements,” Net1 said.
“The company intends to settle the purchase consideration for these two investments using a combination of surplus cash, debt and new equity placement.”
“The combination of the diverse technological, commercial and logistical capabilities of Net1, Blue Label, Cell C and DNI provides a substantial and compelling business case for us,” said Net1 CEO Serge Belamant in a statement to shareholders.
“We are very excited about concluding these transformational transactions and will provide further details regarding the rationale for these transactions, the final consideration paid and the funding structure when the transactions close.”
Net1’s CPS has been in the headlines in recent weeks over the failure of the South African Social Security Agency (Sassa) to issue a new contract for the payment of welfare to 17m indigent people.
The problem is fast escalating into full-blown crisis. On Wednesday, Sassa withdrew an application to the constitutional court to extend a payment distribution contract with CPS the day after filing it, adding to confusion around how government intends to ensure millions of people continue to receive payments from 1 April. — © 2017 NewsCentral Media
