Blue Label has agreed to buy smartphone distributor 3G Mobile for R1.9bn in a deal that will strengthen its expansion into the cellphone market beyond the distribution of pre-paid products such as airtime.
The transaction would also give it access to eight countries in Africa including SA, and entry into the handset financing market. The deal will be settled through cash and shares.
3G Mobile distributes and finances mobile devices and handsets to major retailers and cellular network providers. It has distribution rights for all major mobile devices, from handset manufacturers including Apple, Samsung, Huawei, HiSense, ZTE and Nokia.
The adoption of smartphones has soared in recent years and the trend is set to continue.
Through its wholly owned subsidiary Comm Equipment, 3G Mobile provides the financing of the mobile handset component of contracts to cellular network providers such as Cell C.
3G Mobile will be used as Blue Label’s expansion platform into the financing and supply of mobile devices, handsets and related products.
"3G Mobile provides the ideal platform to consolidate Blue Label’s low-cost and certified preowned mobile handset divisions into a consolidated group and provides a solid foundation for distribution into the burgeoning low-cost smartphone market," it said.
Blue Label already owns cellphone stores, located mainly in township-based malls and shopping centres, in a partnership with the Edcon group.
Blue Label is in the process of buying 45% of Cell C in a deal that is aimed substantially at reducing Cell C’s debt.
Electronic payment provider Net 1, which is buying a 15% shareholding in Cell C, told Bloomberg that Cell C’s recapitalisation was dependent on regulatory approvals and renewal of spectrum licences.