Blue Label plans to buy 3G Mobile
Move will enable the firm to expand its footprint in Africa
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.