Competition body approves Cell C’s recapitalisation

SA’s third-largest mobile operator, Cell C, has received approval from competition authorities for its recapitalisation.

On Thursday, the Competition Commission said it has recommended to the Competition Tribunal to conditionally approve the proposed transaction in which Gatsby SPV intends to acquire certain assets of the mobile network operator, Cell C.

Cell C says it is pleased with the outcomes. “This is an important step towards concluding a complex restructuring for the mobile operator,” the company said.

This brings the mobile network operator one step closer to finalising its recapitalisation programme aimed at addressing the company’s almost R9bn long-term debt burden.

Such a recapitalisation will likely see Gatsby SPV, whose owners remain anonymous, taking up an equity stake in Cell C. It has been widely expected that the Buffet Consortium, led by billionaire Jonathan Beare, will be taking up that stake in the mobile operator.

Despite this approval, Cell C remains cautiously optimistic until the deal has been fully concluded and all requirements have been met.

The transaction is still subject to Competition Tribunal approval. By law, the commission investigates anticompetitive complaints and mergers and acquisitions, and makes recommendations on whether transactions or actions by companies are fair. The final say rests with the tribunal, which makes an order or final determination.

Cell C said that “various stakeholder engagements” and the conclusion of long form transaction agreements still needs to be done before the deal is finalised.

Cell C has struggled to make consistent profits since its launch in 2001, carrying R8.7bn in debt on its balance sheet. The operator’s declining fortunes have resulted in its largest shareholders, Blue Label Telecoms and Net1, which together hold 60% of its equity, writing their combined R7.5bn investment down to nil. Blue Label has previously indicated it could take its current 45% stake in the mobile operator down to about 30%. 

Douglas Craigie Stevenson, Cell C’s CEO, said: “A recapitalisation is an important pillar of Cell C’s turnaround strategy. We are being diligent and thorough to ensure it is a transaction that meets all conditions, and continue to engage with all stakeholders. In our minds it is not done and there is still work to do, but we are pleased with the progress to date.”

gavazam@businesslive.co.za