Johannesburg – Blue Label Telecoms, a reseller of prepaid mobile and electricity vouchers, announced plans to buy 35% of Cell C.
It Planned to Spend R4 billion for 35% stake of Cell C, which was met with ‘disapproval’ by the market on Thursday,(10 December 2015), the company saw their stock drop to 6.02% at R10.15 by 3.53pm on the JSE.
The transaction is for the stake, which is currently owned by Dubai-based ‘Oger Telecom’ which last month was engaged in talks to sell the mobile operators Assess to Telkom.
Analysts Say, “the acquisition price and the valuation of Cell C is quite high, Therefore, Some investors were not happy to the price that Blue Label was paying for that stake. Furthermore, some investors may be concerned with the airtime voucher deals that Blue Label has with Cell C’s competitors, Vodacom and MTN.”
But Blue Label assured the market on Thursday that it has received significant support in writing from its shareholders for the proposed Cell C deal.
This is not the first major move, announcement for cell C stakes.
Previously Telkom walked away from buying Cell C after concluding a due diligence, which might have uncovered some issues that the management were not happy with. But the official statement from Telkom was that talks collapsed after not reaching an agreement with Oger Telecom on how to value Cell C stakes.
“Through Telkom’s engagement with Oger Telecoms in relation to Cell C, it has become clear that there is a difference between the parties on the assessment of value of the proposed transaction. As no agreement has been reached, Telkom and Oger Telecoms today agreed to end all discussions,” Telkom informed investors last month.
Market talk has suggested that Oger Telecom was asking a R20 billion price tag on Cell C.
However, a Cape Town analyst, who wanted to remain anonymous, last month after Telkom walked away from Cell C, said: “We believe Telkom has discovered some nasty issues when they were conducting their due diligence on Cell C assets and they used the price issue as a sticking point to avoid painting the company as a vulnerable asset.”
The management on behalf of the employees of Cell C has also submitted a binding offer to co-invest in the mobile phone operator with Cell C’s current shareholder, 3C Telecommunications and Blue Label. Cell C employees will then hold around 30% of the total issued share capital in Cell C at a cost of R2.5 billion at the conclusion of the restructuring programme.
If the recapitalization programme is successful, 3C Telecommunications will hold 35% of Cell C, Management and staff 30% and Blue Label 35% of the ordinary shares in the company.
