SA's third mobile operator, Cell C, has confirmed it is in discussions to sell certain parts of its national network; a move which analysts say is “excellent”.
Speaking at the operator's results presentation yesterday, CEO Lars Reichelt said a deal is under way, but declined to name the companies.
Reichelt said the deal would see Cell C hand over its “passive components” to the winning bidder, while Cell C would hold onto its active cells. “This is best practice globally, and will give us an opportunity to monetise these assets where we would not have been able to before,” he explained.
Speculation holds that the company is in discussions with two possible businesses: American Tower Corp and Eaton Telecom. Both of the international businesses specialise in leasing telecoms network infrastructure and a deal could put Cell C back in the black.
BMI-TechKnowledge MD Denis Smit says the tower deal is just one more of Reichelt's shrewd moves in the market over the last year. He welcomes the concept, saying telecoms operators around the world are looking at solutions like this.
Smit adds that, with a saturated voice market, all the telcos are looking at data opportunities with more intensity. The tower deal, coupled with Cell C's data network roll-out, puts the mobile operator in a new competing position, he notes.
Reichelt has stepped up the turnaround process, by convincing current shareholders to turn their loans into equity, effectively slashing the company's debt in half. Cell C is 75%-owned by Saudi Oger, through Oger Telecom and Lanun Securities, and 25%-owned by CellSAf, a black empowerment business.
Smit says the recapitalisation shows a good level of shareholder confidence in the business, and Reichelt must have presented an exceptional business plan.
Cell C will fork out R5 billion for the new Internet capacity, and is sourcing financing for the deal.
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