Blue Label is acquiring a 45% stake Cell C at a cost of R5.5 billion as part of mobile operator’s recapitalisation programme.
In December Blue Label Telecoms put their hand up to acquire a 35% stake in Cell C for R4 billion. The deal was subject to all the regulatory clearances, but it was announced today that Blue Label will be going after a bigger slice.
“The implementation of the Cell C recapitalisation will result in its existing net borrowings, comprising any contractual obligations pertaining to monies borrowed, including shareholder loans, less cash and cash equivalents, being reduced to a maximum of R8.0 billion,” Blue Label said in a press statement.
The deal is broken down as follows:
- Blue Label will hold 45% shares for R5.5 billion
- Cell C will hold 10%
- Albanta Trading 109 will hold 15%
- 3C Telecommunications will hold the remaining 30%
The first announcement in December came only a couple of weeks after Telkom decided not to pursue a deal that would have seen the fixed and mobile line giant acquire a stake in South Africa’s third biggest mobile operator.
In a shareholder statement, the operator said that Blue Label was the preferred partner, as it has worked closely with it for many years.
“Blue Label has, for a number of years, acted as one of the primary distribution channels for Cell C. This has resulted in the development of a strong relationship between Blue Label and Cell C. The Proposed Transaction provides a compelling value proposition to Blue Label, as well as to Cell C and its customers, affording both companies the opportunity to realise synergies in product distribution, and positioning Blue Label to benefit from the improved operational and financial performance that the combined platform will create,” it said.