Blue La­bel plans to buy 3G Mo­bile

Move will en­able the firm to ex­pand its foot­print in Africa

The Star Early Edition - - COMPANIES - Sandile Mchunu

JSE-LISTED Blue La­bel Tele­coms’ shares hardly blinked yes­ter­day after the telecom­mu­ni­ca­tions com­pany an­nounced that it planned to spend R1.9 bil­lion to ac­quire 100 per­cent of the is­sued share cap­i­tal of smart­phone dis­trib­u­tor 3G Mo­bile ahead of its planned pur­chase of wire­less car­rier Cell C.

Blue La­bel shares closed un­changed at R15.15 after the firm said it had en­tered into an agree­ment to pur­chase the stake in 3G Mo­bile with its wholly owned sub­sidiary, The Pre­paid Com­pany.

The group said the shares in 3G Mo­bile would be ac­quired in two stages, with The Pre­paid Com­pany ini­tially ac­quir­ing 47.4 per­cent of 3G Mo­bile for R900 mil­lion. It said R250m would be paid through is­su­ing Blue La­bel shares to 3G vendors and R650m would be set­tled in cash on a de­ferred ba­sis.

Blue La­bel said the re­main­ing 52.6 per­cent stake in 3G Mo­bile would be pur­chased for R1bn.

The ac­qui­si­tion is sub­ject to con­di­tions, in­clud­ing the suc­cess­ful con­clu­sion of a due dili­gence in­ves­ti­ga­tion.

“3G Mo­bile pro­vides the ideal plat­form to con­sol­i­date Blue La­bel’s low-cost and cer­ti­fied pre-owned mo­bile hand­set di­vi­sions into a con­sol­i­dated group. The re­sul­tant ac­qui­si­tion is earn­ings ac­cre­tive and pro­vides a solid foun­da­tion for distribution into the bur­geon­ing low-cost smart­phone mar­ket,” Blue La­bel said in a state­ment.

In Oc­to­ber, Blue La­bel said it in­tended to ac­quire a 45 per­cent stake in Cell C for R5.5bn.

Blue La­bel sells tech­nol­ogy for mo­bile com­merce in South Africa and other emerg­ing mar­kets.

The com­pany said 3G Mo­bile would be used as a plat­form to ex­pand into the fi­nanc­ing and sup­ply of mo­bile de­vices, hand­sets and al­lied prod­ucts.

“Both of th­ese func­tions sup­ple­ment Blue La­bel’s strate­gic ob­jec­tives to pro­vide value-added ser­vices to both Cell C and its own cus­tomer base,” the com­pany said.

Jor­dan Weir, an eq­ui­ties trader at BayHill Cap­i­tal, said the ac­qui­si­tion would al­low Blue La­bel to ex­pand its pres­ence on the African con­ti­nent, par­tic­u­larly with re­spect to the distribution and fi­nanc­ing of mo­bile de­vices.

“As a re­sult of the buy­out of the al­ready well-es­tab­lished 3G Mo­bile busi­ness, Blue La­bel would au­to­mat­i­cally be granted ac­cess into eight African coun­tries and their con­sumer bases, while gain­ing distribution rights of ma­jor mo­bile de­vice brands such as Ap­ple, Huawei and Sam­sung,” Weir said.

“This is all seem­ingly in an ef­fort to lever­age Blue La­bel’s re­cent deal with Cell C.”


Brett Levy, the chief ex­ec­u­tive of Blue La­bel Tele­coms, which plans to ac­quire the is­sued share cap­i­tal of 3G Mo­bile.

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