Cell C threatens BEE partner with lawsuit


Cell C has threatened its Black Empowerment Economic (BEE) partner, Cellsaf, with a hefty legal lawsuit after the latter issued a statement recently pointing out a number of possible contraventions in its recapitalisation transaction.

The company’s lawyers have sent the company and all the directors a letter threatening a lawsuit should they not disassociate themselves with the statement.

The statement in which Cellsaf declared Cell C’s recently announced restructuring deal involving Net 1 UEPS and Blue Label Telecoms “a blatant attempt at corporate capture” that was likely to collapse was released by Nomonde Mabuya, Cellsaf’s company secretary.

According to Cellsaf, the transaction was flawed on a number of grounds.

“It does not comply with various provisions of the Companies Act, the Electronic Communications Act or the Competition Act. The sponsors of the transaction have not complied with the mandated regulatory processes relating to changes in control of a license, and they are therefore in breach of the specific requirements, regulated by the Independent Communications Authority of South Africa (Icasa). The sponsors have not complied with the requirements relating to a merger of this nature, and potentially face an investigation by the Competition Commission relating, inter alia, to the prior implementation of a large merger,” the statement read.

However, in early August, Blue Label Telecoms announced that the Cell C recapitalisation had been completed.

The transaction sees Blue Label bag a 45% stake in Cell C via its subsidiary Net1 UEPS, which hogged headlines over the South Africa Social Security Agency scandal earlier this year.

According to Cell C, the recapitalisation transaction would see Cell C’s black ownership credentials increase to more than 30% from its current 25%.

Icasa also released a statement late last month indicating that it received a notification from Cell C regarding the change of shareholding but also said on the face of it the transaction seems to trigger the provisions of Section 13 of the Electronic Communications Act of 2015 and ought to have been filed as an application for change of control of the licensee.

Icasa said it would be taking external legal advice on the matter, including on appropriate enforcement actions it can take to ensure compliance.

“Cell C will engage with CellSAf in the relevant forums and does not intend to do so via the media,” Cell C said when in response to a question sent to it on the matter.

The tug of war between Cellsaf and Cell C has going on since 2015 with the former losing a court bid against the transaction.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24


Read the digital editions of City Press here.
Read now
Voting Booth
Consumers are paying exorbitant rates for power because of extra fee charges that are added when buying prepaid electricity. This is on top of an already high electricity tariff rate. Some of these fees are not even regulated. Should government regulate electricity fees?
Please select an option Oops! Something went wrong, please try again later.
17% - 3 votes
0% - 0 votes
Scrap fees
83% - 15 votes