Blue Label and Net1 tie up Cell C deal
Blue Label and Net1 have completed the R7.5bn acquisition of a 60% shareholding in Cell C, paving the way for the turnaround of the struggling entity. A Business Day report says Blue Label – which distributes cell phone airtime vouchers and SIM-card starter packs – owns 45% of Cell C, while electronic payment provider Net1 holds 15%.
The entity 3C Telecommunications – Cell C’s founding shareholders – will own 30%, while the balance will be held by management and staff. The transaction is expected to reduce Cell C’s debt substantially to R6bn, from about R23bn. The tie-up will also give Cell C some financial headroom that could strengthen its competitiveness.
Cell C did not have enough internal resources for aggressive growth to keep up with much bigger and cash-flush competitors.
Its rivals are spending more than R10bn a year on network infrastructure that has given them a strong market leadership compared with Cell C. Net1 – which has also concluded the sale of a 45% shareholding in Cell C’s SIM-card starter pack distributor DNI – sees an opportunity to provide its financial services products to Cell C’s 15m subscribers.
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