Cell C's head office in Johannesburg. (Gareth van Zyl)
Johannesburg - Blue Label Telecoms plans to buy a 45% stake in South Africa’s third largest mobile network Cell C for R5.5bn.
Blue Label Telecoms [JSE:BLU] had previously planned to acquire 35% of Cell C for R4bn.
The final details of the deal, which were announced Tuesday, are further set to include Net 1 UEPS Technologies subscribing to 118 million Blue Label shares for R2bn. This means that Net1 will have a 15% stake in Blue Label.
Management and staff of Cell C will also subscribe for 25% of the issued capital. Meanwhile, 3C Telecommunications is set to hold the remaining 30% of the total issued share capital, said Cell C.
The deal and recapitalisation of Cell C is expected to be concluded on November 18 and reduce the mobile network’s debt to R8bn.
“This is a transformational transaction for Cell C and we are extremely excited about the strengthening of our relationship with Blue Label Telecoms,” said Jose Dos Santos, Cell C Chief Executive Officer.
Serge Belamant, chair and CEO of Net1 said “this investment cements the start of a multi-layered strategic alliance between our two groups that will greatly enhance shareholder value on both sides through cooperation between our combined local and international operations.”
Cell C is South Africa’s third largest mobile network with around 24 million subscribers.
Johannesburg listed Blue Label distributes prepaid airtime, starter packs, data and electricity tokens. It also specialises in transactional offerings such as ticketing and financial services.
Net1 UEPS [JSE:NT1] is also listed on the JSE and currently has a R10bn grants tender to electronically distribute grant payments to over 10 million recipients in South Africa.
Net1, though, has controversially come under the spotlight in recent years over the tender and other issues.
In 2014 the Constitutional Court ordered Sassa to reissue the tender amid the agency’s “irregular” conduct in awarding the contract to CPS.
Net1 has also come under fire for selling mobile airtime and loans to social grant recipients. Earlier this year, Net1 revealed that its chief executive officer Serge Belamant was a “victim” of a fake PhD scandal.
For years, Serge Belamant - who has been Net1's CEO since 2000 and the chairperson of the company's board since 2003 - has referred to himself as Dr Belamant.
Amid controversies dogging Net1, the company announced last year that it doesn’t plan to reapply for the Sassa tender.