Blue Label ‘to buy South Africa’s Cell C’, but not just yet

Blue Label ‘to buy South Africa’s Cell C’, but not just yet

Brett Levy Blue Label.jpg

South African mobile commerce company Blue Label Telecoms wants to increase its stake in mobile operator Cell C from 49.5%, but not yet.

Brett Levy, founder and co-CEO of Blue Label, said the company will make a firm decision before 31 May, the end of its financial year.

Levy told South African news site Techcentral: “We are in no man’s land now. We have a big percentage [in Cell C] but we don’t have control, which is not an ideal position to be in. You either have to sell down or buy up, but you can’t stay in the same position.”

Blue Label took a 40% stake in 2017, but that did not give it control. It increased its stake to 49.5% in September 2022 in a recapitalisation of Cell C, but even that did not give it control. Cell C is the fourth largest operator in South Africa, behind Vodacom, MTN and Telkom.

At one stage Blue Label wrote down the value of its stake to zero, but now it says its 49.5% stake is worth 1.5 billion South African rand (US$80 million), implying the whole telco is worth $170 million.

Levy told Techcentral: “Everyone knows what we’ve [done] over the last seven years to save this business, and the value we could add to it if we had control of it.”

However, he warned that a takeover would have to be agreed with the South African telecoms and competition regulators.

“I think everyone would welcome it if we went this route, so everyone has stability.”

It’s nearly four years since Douglas Craigie Stevenson, then interim CEO of Cell C, wrote an open letter, published on its website, listing the problems that the company faces. He said then that “Cell C has a zero-tolerance policy towards illegal or unethical activity and have encouraged employees to use the independent whistle-blowers service to anonymously report irregularities or illegal activities”.

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