Cell C is selling its 50% stake in Virgin Mobile. This announcement comes on the back of Red Bull Mobile's launch last night, with Cell C backing the new operator.
SA's third mobile operator will sell its stake in Virgin Mobile and Virgin Group UK will increase its stake from 50% to 55%.
Bahamas-based Calico Investments will acquire the remaining 45% stake.
Virgin Mobile says Cell C will continue as Virgin Mobile's network partner in terms of an updated and expanded network services agreement.
Renewed optimism?
In August, Virgin Mobile said taking market share was not its aim. This was after it had revised its target from 10% to taking just 1% of market share.
“We're not really focused on market share. We're not trying to take a share of the market. We're targeting growth for the company,” said CEO Steve Bailey.
He explained that the 10% target was set two CEOs ago and was unrealistic.
However, he now says Virgin Mobile has shown consistent high subscriber growth and has significantly increased its base of higher average revenue per subscriber post-pay subscribers in SA over the last two years.
“It is time for us to capitalise on this growth and bring in an additional shareholder to invest in Virgin Mobile's further expansion, which will enable us to deliver more exciting products and services to our valued customers.
Cell C CEO Lars Reichelt says SA's third operator has been and will continue to be a strong partner of Virgin Mobile.
“The change in shareholding is part of Cell C's strategy of providing a platform for growth for MVNOs [mobile virtual network operators], backed up by our... HSPA+ 900/2100 network.”
Phase two
The transaction is still subject to certain conditions, including South African Competition Commission and Exchange Control approvals, adds Virgin Mobile. Closing is expected by April.
“Calico, an investment company, plans to develop a strategic relationship with Virgin Mobile and, together with Virgin, will invest additional growth capital into Virgin Mobile. This will enable Virgin Mobile to offer a wider range of improved products and services to its growing customer base in SA,” says the mobile operator.
Gordon McCallum, Virgin Management CEO, says this is Virgin Mobile's second phase of development as the first fully independent MVNO in SA.
“With our new shareholder on board and the network services agreement in place with Cell C, we expect Virgin Mobile to grow,” he notes.
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