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Special purpose vehicle Gatsby to acquire Cell C assets

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 21 May 2020

The Competition Commission (CompCom) has recommended conditional approval of the proposed acquisition of certain Cell C assets by special purpose vehicle Gatsby SPV.

Gatsby is a ring-fenced newly incorporated special purpose vehicle which was incorporated for the sole purpose of entering into the proposed transaction.

In a statement, the competition watchdog says Gatsby will be controlled by a trust that is yet to be formed.

Embattled carrier Cell C has been under pressure for some time and has been discussing various proposals to save the company.

The telco recently lost 2.9 million subscribers for the year ended December and posted further losses for the period under review, declaring a loss of R3.94 billion compared to a R7.36 billion loss in 2018.

Earlier this month, it announced some senior managers and executives at Cell C may lose their jobs, as it had initiated a consultation process with the possibility of redundancy of certain positions and retrenchments.

The telco said this review of the management structure was based on a detailed analysis of the operating model and “organisational structure which revealed that the current structure has grown over time while the business has stagnated”.

The Gatsby SPV transaction is the latest potential lifeline for the troubled company after rebuffing Telkom’s offer last year.

Had the Telkom transaction been successful, it would have given the entity a fighting chance, as it would have had north of 27 million subscribers, to go up against MTN’s 30 million and Vodacom’s 43.9 million.

Cell C told ITWeb last year that it “will keep the door open to any conversations that will assist the company’s future viability”.

This followed market speculation that the company was in talks with China Mobile on a potential takeover bid.

The latest proposed acquisition of “certain Cell C assets” came to light this week after the CompCom told Parliament it was prioritising the proposed transaction during the COVID-19 pandemic.

In a statement issued today, the CompCom says it has found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets.

“The commission further found the proposed transaction does not raise any other public interest concerns.”

However, it cautions that despite its finding, the CompCom notes the merging parties are currently not in a position to confirm who will be appointed as trustees.

For that reason, it says: “The commission believes the proposed transaction may raise competition concerns. These include, among others, anti-competitive information exchange should the trustees include individuals from firms that compete with Cell C or present undisclosed competitive overlaps.”