Saudi stake in Cell C grows

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 17 Aug 2005

CellSaf, the black empowerment shareholder of cellular network operator Cell C, has sold a portion of its stake to a Panamanian registered company, Lanun Securities, in an effort to make itself debt free.

A statement issued by Cell C today says that following the CellSaf sale, its shareholders are Saudi-owned Oger Telecoms with 60%, CellSaf with 25%, and Lanun Securities with 15%.

The new shareholding leaves Cell C with the minimum black empowerment holding allowed for in the ICT empowerment charter. Details of how much the stake was sold for have not been disclosed.

Lanun Securities is the offshore investment arm of Saudi engineering group Rashid.

Jonathan Newman, advisor to Cell C CEO Talaat Laham, says Rashid and Oger have a close relationship in Saudi Arabia and the deal was done because of this.

According to Cell C, the proceeds of the sale were used to settle the funding of CellSaf`s original 40% shareholding, leaving CellSaf with outright ownership of a 25% debt-free, unencumbered stake in Cell C`s holding company, 3C Telecommunications (Oger).

CellSaf retains all of its protections as a minority shareholder in Cell C and the same number of directors on Cell C`s board as it held previously. In addition, CellSaf has secured pre-emptive rights to re-purchase the 15% of the shares sold to Lanun should Lanun choose to dispose of them in future.

The deal received the green light after the Independent Communications Authority of SA and the exchange control and competition authorities approved the transfer of shares.

CellSaf is made up of 30 South African empowerment groups, including broad-based women`s groups and various rural groups.

Lehlohonolo Moloi, chairman of CellSaf, says the transaction represents a milestone for empowerment and the transfer of ownership in the South African economy.

"This deal represents a fully paid transfer of considerable value into the hands of CellSaf`s shareholders, who represent many thousands of previously disadvantaged South Africans," he says.

Settling debt

Yusuf Surtee, chairman of CellSaf`s finance committee, says the transaction represents the culmination of more than three years of effort by the members of the committee and its advisers to structure a transaction that would result in CellSaf`s debt being settled.

Cell C claims it is the only cellular network operator to have achieved 25% black equity ownership, and says the transaction represents one of the first major empowerment deals in SA to fully settle its funding obligations.

"The transaction is doubly positive for Cell C," says Laham. "It introduces a solid new offshore shareholder in Lanun, while enhancing the long-term sustainability of black economic empowerment at Cell C."

The company, which employs close to 2 000 staff and has assets of around R5 billion, claims that a debt-free - and therefore more focused - CellSaf could help the business to further grow its active subscriber base of more than two million subscribers.

Newman says Cell C plans a media briefing later this month to present updated subscriber figures and discuss the proposed joint venture with Virgin, with which discussions are continuing.