Cell C’s recapitalisation plan comes under fire
THE RECAPITALISATION of Cell C, South Africa’s third largest cellular company, has come under fire from the Independent Communications Authority of South Africa (Icasa) for failing to adhere to regulations.
Blue Label Telecoms bought 45 percent of Cell C through its subsidiary, The Prepaid Company, for R5.5 billion with effect from August. Icasa raised red flags late on Wednesday, saying Cell C had to give clarity “on this apparent non-compliance with the legislative provision”.
Icasa also said it was taking external legal advice on the matter, including on appropriate enforcement actions.
Icasa said its preliminary view of the deal was that the Cell C recapitalisation transaction “triggers the provisions of Section 13 of the Electronic Communications Act of 2015 and ought to have been filed as an application for change of control of the licensee”.
Section 13 of the act stipulates that an an individual licence may not be let, sub-let, assigned, ceded or in any way transferred, and the control of an individual licence may not be assigned, ceded or in any way transferred, to any other person without the prior written permission of the authority.
The Blue Label deal saw the recapitalisation of Cell C, with debt reduced from about R23 bn to less than R6 bn.
Cell C said yesterday that it had received extensive legal advice and was comfortable that the recapitalisation did not amount to a transfer of control that would have required approval.
“Cell C will submit detailed and extensive information to Icasa and welcomes the opportunity to engage further regarding this transaction that has ensured the survival of the company as a sustainable competitor in the sector, increased ownership by historically disadvantaged individuals and saved many thousands of jobs,” the company said.
Sibonginkosi Nyanga, an analyst at Momentum Securities, said Cell C would have to appraise Icasa with all required information.
“The onus is on Cell C to prove to Icasa that they are not ceding or transferring the licence to Blue Label,” Nyanga said.
Last month the Minister of Telecommunications and Postal Services, Siyabonga Cwele, welcomed the Blue Label investment, saying it was significant as it saved Cell C and prevented the monopolisation of the telecommunications industry.
“The investment and management actions have saved approximately 2 500 direct and 15 000 indirect jobs. This is in line with the government’s policies, such as the National Integrated Policy, that advocate opening up the sector to new players, particularly to blacks and small businesses,” Cwele said.