Johannesburg - The recent recapitalisation deal between mobile network Cell C and airtime seller Blue Label Telecoms [JSE:BLU] could see potential delays.
Cell C is in the process of submitting extensive information to the Independent Communications Authority of South Africa (Icasa) and is unsure as to why the regulator stated it apparently failed to follow correct procedure in the company’s recent recapitalisation scheme.
On Wednesday, Icasa stated that it planned to engage with Cell C, saying that the network had filed for a change in licensing under separate acts, which were not applicable to the transaction.
In its response, Cell C said it was “strange for the authority to reach its stated conclusion without first hearing Cell C’s position." It said it would make "extensive submissions" and will engage with Icasa on the matter.
Icasa reached the conclusion that the transaction "triggers the provisions of Section 13 of the Electronic Communications Act of 2015 (sic) and ought to have been filed as an application for change of control of the licensee” without first having heard Cell C’s position.
Cell C has received extensive legal advice and is comfortable that the recapitalisation does not amount to a transfer of control that would have required approval.
“The company is of the view that once Icasa, or whomever ultimately considers the transaction, has a proper understanding of it (which Cell C is at pains to provide), it will be clear that there has not been any transfer of control and that no approval is required,” Cell C told Fin24 in statement.
Icasa is reportedly engaging with Cell C to seek clarity on the alleged non-compliance relating to legalities around the transaction.
"Cell C also notes that Icasa has indicated that this is its 'preliminary view' and it has not as yet given the company any indication (despite repeated requests from Cell C) why it has taken this view or what process it is following," it said.
“It is therefore difficult for Cell C to engage with Icasa’s views. Notwithstanding this, Cell C will submit detailed and extensive information to Icasa and welcomes the opportunity to engage further regarding this transaction that has ensured the survival of the company as a sustainable competitor in the sector, increased ownership by historically disadvantaged individuals and saved many thousands of jobs,” Cell C added.
Last month, Cell C’s recapitalisation was finalised with Blue Label’s wholly-owned subsidiary, The Prepaid Company, became a 45% shareholder in R6bn of the issued share capital of Cell C, with a further subscription from Net1 [JSE:NT1] for R2bn.