Earlier this month Cell C and Blue Label Telecoms concluded a recapitalisation of the network operator that was two years in the making.

The recapitalisation was welcomed by the Minister of Communications Ayanda Dlodlo who said she was pleased that the recapitalisation increased the local ownership of Cell C and saved some 17 500 jobs.

But now the Independent Communications Authority of South Africa (Icasa) has said the deal is not compliant with the Electronic Communications Act.

“The Authority has considered the notification and the preliminary view is that the Cell C recapitalisation transaction – on the face of it – triggers 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 in a statement.

Cell C has issued a response this morning saying it is not sure why Icasa believes the recapitalisation triggers “provisions of Section 13 of the Electronic Communications Act”.

“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,” said the network operator in a statement.

The firm says that it will submit detailed and extensive information to Icasa and welcomes the chance to engage with the authority on this matter.

For your convenience we’ve included Section 13 of the Electronic Communications Act of 2015 below.

Section 13 of the Electronic Communications Act of 2015

Transfer of individual licences or change of ownership 13.

(1) An individual licence may not be assigned, ceded or transferred to any other person without the prior written permission of the Authority.

(2) An application for permission to assign, cede or transfer an individual licence may be made to the Authority in the prescribed manner.

(3) The Authority may by regulation, set a limit on, or restrict, the ownership or control of an individual licence, in order to—

(a) promote the ownership and control of electronic communications services by historically disadvantaged groups; or

(b) promote competition in the ICT sector.

(4) The Authority may, subject to Chapter 9, by regulation, set a limit on, or restrict, the ownership or control of an individual licence for broadcasting services in order to promote a diversity of views and opinions.

(5) Regulations contemplated in subsection

(3) and (4) must be made—

(a) with due regard to the objectives of this Act, the related legislation and where applicable, any other relevant legislation; and

(b) after the Authority has conducted an inquiry in terms of section 4B of the ICASA Act, which may include, but is not limited to, a market study.

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.