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Blue Label anticipates ‘smooth’ takeover of Cell C

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 22 Feb 2024
Cell C’s revenue declined 6.7% from R6.3 billion to R5.9 billion.
Cell C’s revenue declined 6.7% from R6.3 billion to R5.9 billion.

Blue Label Telecoms is looking to get a controlling stake in mobile operator Cell C in the next six months.

So said Blue Label co-CEO Brett Levy, speaking to the media after the JSE-listed company today announced its financial results for the six months ended 30 November.

The fintech group has a non-controlling 49.5% stake in Cell C, and is looking to get an additional 4.04% stake via The Prepaid Company.

According to Levy, the company is now looking for a favourable decision from regulators − the Independent Communications Authority of South Africa (ICASA) and the Competition Commission (CompCom) − for the deal to go through.

“We have told the market that we applied for control [of Cell C]. It’s going through the motions. Everyone has had an opportunity to contest it…so we are hoping the CompCom and ICASA are going to run pretty much at the same time,” said Levy.

However, the deal has faced opposition from CellSAf, one of Cell C’s oldest shareholders. CellSAf, which has a 25% shareholding in Cell C, reportedly said it had not been consulted over the issue.

“We are hoping that everything runs pretty smoothly and that we get both approvals in the next six months. That’s what our hope really is. But it is regulatory, so there are no promises. It’s only what we hope,” Levy said.

“We are doing as any company has done in the past at Blue Label. We have applied for control in a subsidiary we own. The very next day after we get control, Cell C will be exactly as you know it to be.”

Cell C CEO Jorge Mendes added that the deal is not a transfer of the licence, but a change of ownership from majority to control.

“We are not giving up the spectrum or ‘crown jewels’ as the media puts it. It’s just not the case.”

Blue Label co-CEO Brett Levy.
Blue Label co-CEO Brett Levy.

Mendes was responding to media reports that said Cell C was transferring control of its network operating licences and radio frequency spectrum to Blue Label in a bid to comply with regulations.

Meanwhile, Mendes revealed Cell C is still financially constrained and he is looking to stabilise the company.

“We are not out of the woods yet…however, from the time that we have started, we have seen consistent growth month-on-month, year-on-year.”

During the period, Cell C says its brand remained resilient, with an increased customer base and strong average revenue per user (ARPU) uplift. It increased the number of customers by 300 000 to 8.5 million, while blended ARPU was R89, up 11%.

According to Cell C acting CFO El Kope, revenue declined 6.7% from R6.3 billion to R5.9 billion.

Cell C explains that despite an improving ARPU, a lower base and gross additions contributed to the declining revenue.