Net1 to buy 15% of battling Cell C

Net1 UEPS Technologies will invest R2 billion ($153 million) for a 15% stake in debt-ridden cellphone operator Cell C, scaling back its commitment in the original deal to take over the company.

Net1, a payments company with extensive operations in emerging markets, is part of a group led by Blue Label Telecoms, an airtime distributor working to cut Cell C’s debt to R6 billion from about R20 billion.

Net1 has, however, dropped its plan to take a stake in Blue Label as part of the deal.

Cell C, the number three cellphone company in Africa’s most advanced economy, has struggled the past decade to compete in a mature market where Vodacom and MTN hold sway.

“Net1 and Blue Label have agreed that Net1 shall confine its investment to a total amount of R2 billion, which will be invested into Cell C,” Blue Label said.

Net1 will no longer subscribe for the Blue Label shares, both companies said.

Net1 had previously said it would buy R2 billion worth of Blue Label shares and pay a further R2 billion for a 15% stake in Cell C.

The airtime distributor said it has signed agreements with other investors to take Net1’s place and subscribe for R2 billion worth of Blue Label shares.

Blue Label said last year it would pay R5.5 billion for a 45% holding in Cell C, a company founded in 2001 by Saudi Arabia’s Oger Telecom and former director Zwelakhe Mankazana.