Cell C’s debt has been reduced in the process from 23 billion rand ($1.7 billion) to six billion rand ($445 million), and Saudi Oger, which also owns 55% of Türk Telekom, has lost much of its investment.
“We are delighted to have concluded this two-year long process for the benefit of all our stakeholders,” said Cell C CEO Jose Dos Santos. “The recapitalisation provides a sustainable growth platform for Cell C that will promote healthy competition in the South African telecom market to further drive down costs and improve our value offerings.”
Blue Label Telecoms subscribed to shares worth 5.5 billion rand, and electronic payment company Net1 subscribed to 2 billion rand worth. “Former bond and debt holders supported the restructure of the debt in Cell C,” said the operator, which competes against MTN and Vodacom in the South African market.
The plan had to be approved by South African and US courts. Alexandra Triptree, London banking and finance partner at law firm Norton Rose Fulbright, said: “Having worked with Cell C for over 15 years, we are delighted to be able to advise it on this multi-faceted financial restructuring, bringing together our experienced lawyers from across the world, to assist in achieving Cell C’s strategic aims.”
As a result of the restructuring the ownership of the company by South African shareholders has increased from 25% to over 86% and the participation of historically disadvantaged persons in Cell C increases from around 25% to more than 30% at ownership level, said Cell C in a statement.
“If you include future substantial investments planned by Cell C, further economic stimulation will also flow from this recapitalisation,” said Dos Santos. “We would like to thank our incoming shareholders for their commitment to seeing through this long process and securing a healthy future for Cell C.”
Blue Label Telecoms, which now has a 45% stake in Cell C, says it supplies “innovative technology for mobile commerce to emerging markets in South Africa and abroad”. Listed on the Johannesburg stock exchange, it targets many of its services “at people who do not have easy access to bank accounts, and we allow them the convenience of being able to transact where and when they want to”.
Brett Levy, joint CEO of Blue Label, said: “This transaction is the most significant in Blue Label’s history and marks a milestone for the group’s strategy. As a supplier and distributor to Cell C, we have already identified multiple synergies in the procurement chain, distribution network and provisioning of products and services.”
