The Competition Commission (CompCom) has recommended that the Competition Tribunal approve Cell C’s proposed acquisition of Blue Label’s Comm Equipment Company (CEC), without conditions.
The move follows Blue Label Telecoms – Cell C’s majority shareholder – recently announcing plans to potentially list the mobile operator on the Johannesburg Stock Exchange (JSE) as part of a broader business restructuring.
This, as the JSE-listed Blue Label Telecoms is exploring strategic options to unlock value for shareholders.
Blue Label currently holds a non-controlling 49.5% stake in Cell C, but aims to gain an additional 4.04% through its subsidiary, The Prepaid Company (TPC), to secure control of South Africa’s fourth-largest mobile operator.
Under the restructuring plan announced in May, Cell C will acquire 100% of CEC, a wholly-owned Blue Label subsidiary, from TPC, in exchange for additional Cell C shares.
CEC manages Cell C’s postpaid services, including supply chain, commercial operations, marketing, billing, credit and collections. Blue Label says the integration will give Cell C full oversight of its postpaid customer base.
The restructuring will also involve aligning the ownership structures of special purpose vehicles holding Cell C equity with its new capital framework.
According to the CompCom, Cell C is not controlled by any single firm, with its shareholding widely dispersed.
The mobile operator provides telecommunications services to both businesses and consumers, and through its Cell C Service Provider Company, sells SIM cards, accessories and other products to prepaid and postpaid subscribers.
CEC, the target firm, is wholly-owned by TPC, itself a wholly-owned subsidiary of Blue Label. It provides postpaid sales, contract renewals, marketing, administrative support, and also sources and sells handsets to Cell C’s postpaid customers.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market. The proposed transaction does not raise significant public interest concerns,” it concluded.
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