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11 August 2017
| Alan Burkitt-Gray
South African mobile commerce company Blue Label Telecoms has taken over effective control of mobile operator Cell C in a financial restructuring.
Cell C’s debt has been reduced in the process
from 23 billion rand ($1.7 billion) to six billion rand ($445
million), and Saudi Oger, which also owns 55% of Türk
Telekom, has lost much of its investment.
"We are delighted to have concluded this two-year long process
for the benefit of all our stakeholders," said Cell C CEO Jose
Dos Santos. "The recapitalisation provides a sustainable growth
platform for Cell C that will promote healthy competition in
the South African telecom market to further drive down costs
and improve our value offerings."
Blue Label Telecoms subscribed to shares worth 5.5 billion
rand, and electronic payment company Net1 subscribed to 2
billion rand worth. "Former bond and debt holders supported the
restructure of the debt in Cell C," said the operator, which
competes against MTN and Vodacom in the South African
The plan had to be approved by South African and US courts.
Alexandra Triptree, London banking and finance partner at law
firm Norton Rose Fulbright, said: "Having worked with Cell C
for over 15 years, we are delighted to be able to advise it on
this multi-faceted financial restructuring, bringing together
our experienced lawyers from across the world, to assist in
achieving Cell C’s strategic aims."
As a result of the restructuring the ownership of the company
by South African shareholders has increased from 25% to over
86% and the participation of historically disadvantaged persons
in Cell C increases from around 25% to more than 30% at
ownership level, said Cell C in a statement.
"If you include future substantial investments planned by Cell
C, further economic stimulation will also flow from this
recapitalisation," said Dos Santos. "We would like to thank our
incoming shareholders for their commitment to seeing through
this long process and securing a healthy future for Cell
Blue Label Telecoms, which now has a 45% stake in Cell C, says
it supplies "innovative technology for mobile commerce to
emerging markets in South Africa and abroad". Listed on the
Johannesburg stock exchange, it targets many of its services
"at people who do not have easy access to bank accounts, and we
allow them the convenience of being able to transact where and
when they want to".
Brett Levy, joint CEO of Blue Label, said: "This transaction is
the most significant in Blue Label’s history and
marks a milestone for the group’s strategy. As a
supplier and distributor to Cell C, we have already identified
multiple synergies in the procurement chain, distribution
network and provisioning of products and services."
Blue Label Telecoms,