Johannesburg – South Africa’s third largest mobile network Cell C says its board has accepted an offer from Blue Label Telecoms [JSE:BLU] to acquire 35% of the company for R4bn.
The boards of Cell C and its holding company 3C Telecommunications have also accepted an offer from Cell C management and staff to hold about 30% of the mobile network's shares for R2.5bn.
The board approval comes after Cell C announced earlier this month that it received offers to recapitalise the company – a move that is expected to reduce net debt to R8bn or less when implemented.
Meanwhile, current Cell C shareholder 3C Telecommunications also plans to hold about 35% of the total issued shares at the close of the recapitalisation, a Cell C statement read on Wednesday.
“This transaction will not only benefit Cell C and empower its staff, but more importantly, it will solidify Cell C’s assurance to its customers to provide the most innovative products and services, backed by continued growth and investment in its network,” said chairman of Cell C Mohammed Hariri in a statement.
The planned recapitalisation of Cell C is still subject to all parties securing funding and obtaining regulatory approvals. But if successful, the expected effective date of the recapitalisation is June 1 2016, Cell C said.
The recapitalisation is further expected to result in the current major stakeholder in Cell C, Dubai-based Oger Telecom, diluting its stake from 75% to approximately 27%, according to a recent report on technology news website TechCentral.
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. Cell C is South Africa’s third largest network with 22 million subscribers.
Blue Label’s interest in acquiring a stake in Cell C was made public after fixed-line telecoms company Telkom [JSE:TKG] last month announced that it had abandoned talks to buy Oger Telecom’s stake in Cell C.