Bru­tal bat­tle wages over con­trol of Cell C

CityPress - - News -

A bruis­ing cor­po­rate bat­tle is set to play out over the next two days over the con­trol of mo­bile op­er­a­tor Cell C.

The coun­try’s third big­gest op­er­a­tor has strug­gled to com­pete with gi­ants Vo­da­com and MTN and op­er­ate prof­itably, mak­ing it a con­stant tar­get for a takeover or a merger. The lat­est suit­ors, Telkom and Blue La­bel Tele­coms, are go­ing head-to-head for a stake in Cell C.

Un­de­terred by the Cell C board’s out­right re­jec­tion of its R7 bil­lion of­fer to buy the op­er­a­tor’s debt and ac­quire eq­uity, Telkom is fu­ri­ously lob­by­ing lenders to back its bid ahead of Tues­day’s D-day for the fi­nal­i­sa­tion of the deal. The deal be­tween Cell C and JSE-listed Blue La­bel Tele­coms en­tails Blue La­bel tak­ing a 45% stake for R5.5 bil­lion.

The land­scape-chang­ing deal could be scup­pered over the next 48 hours if some of Cell C’s lenders warm to Telkom’s woo­ing, which in it­self would dras­ti­cally al­ter the mo­bile com­mu­ni­ca­tions ter­rain.

This could hap­pen as Chi­nese bank ICBC ini­ti­ated con­tact with Telkom, ask­ing it to help the heav­ily in­debted Cell C. Other lenders who have bought into the Blue La­bel deal – in­clud­ing lo­cal banks – could switch sides in the next two days.

Also likely to stand in the way of the tie-up is the re­sis­tance of black em­pow­er­ment ve­hi­cle Cel­lSAf which, City Press un­der­stands, is plan­ning to in­ter­dict the deal be­fore Tues­day as it be­lieve it will di­lute its share­hold­ing and prej­u­dice its in­vest­ment. Cel­lSAf owns 25% of Cell C’s hold­ing com­pany 3C.

A 25% black share­hold­ing was one of the con­di­tions on which Cell C got its li­cence from the In­de­pen­dent Com­mu­ni­ca­tions Author­ity of SA, and there are con­cerns that this could be com­pro­mised. But Cell C man­age­ment main­tains that shares to be placed in an em­ployee par­tic­i­pa­tion trust would deal with this.

If the Telkom bid suc­ceeds, it will put the com­bined new en­tity in a strong po­si­tion to chal­lenge Vo­da­com and MTN. Like Cell C, Telkom Mo­bile has strug­gled to break the stran­gle­hold of the two gi­ants.

“Telkom be­lieves the in­dus­try and cus­tomers will ben­e­fit from a strong third mo­bile player that would break the cur­rent du­op­oly,” an in­sider said.

Height­en­ing the ten­sions in what is turn­ing out to be an ugly cor­po­rate bat­tle was the de­ci­sion by the Cell C board to turn down the Telkom pro­posal within 24 hours of its tabling. This raised the ire of Telkom ex­ec­u­tives, who be­lieve the of­fer was not prop­erly con­sid­ered by the board mem­bers, most of whom are from the Dubai-based ma­jor­ity share­holder Oger Tele­com and stand to ben­e­fit from the Blue La­bel deal.

– Staff re­porter TALK TO US Do you think a third cell­phone gi­ant will help to bring down your cell­phone and data bills?

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