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Debt-ridden Cell C in advanced talks with MTN

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Troubled mobile operator Cell C says it is in advanced talks with rival MTN as speculation about the future of the Cell C dominates the headlines.

Cell C issued a statement this afternoon following media speculation today that the company is a potential target of Telkom.

Earlier today, Telkom issued a statement on SENS saying: “Shareholders are advised that Telkom is in discussions in relation to a potential acquisition, which if successfully concluded, may have a material effect on the price of the company’s securities.

“Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement is made.”

Following the statement, media was awash with reports believing the potential acquisition to be Cell C.

In its statement, Cell C says: “In response to recent speculation, Cell C would like to provide the following update.

“Cell C remains focused on ensuring operational efficiencies, restructuring its balance sheet, implementing a revised network strategy and improving overall liquidity.

“It confirms previous market communication that negotiations with MTN are at an advanced stage.

“In addition, Moelis & Company, Linklaters and DLA Piper have been appointed as independent financial and legal advisers to the ICA [inter-creditor agreement] lenders representing a significant proportion of the company’s debt and constructive discussions on the recapitalisation are underway with them and other stakeholders in respect of various proposals.”

Cell C and MTN completed a roaming deal in November last year. However, after the agreement, reports emerged that Cell C was struggling to pay its dues to MTN.

Nonetheless, MTN later came out saying the troubled Cell C had made amends, paying about R750 million for the roaming deal.

Cell C recently reported a loss of R8 billion for the year ended May, a loss that pulled down its biggest shareholder Blue Label Telecom.

The embattled telco’s net debt, excluding finance leases, has ballooned from R7.44 billion to R8.24 billion, which Cell C claims was driven by increased capital expenditure and working capital drawdown facilities.

Blue Label, which acquired a 45% stake in Cell C in 2017 for R5.5 billion, has since written down the value of its investment in Cell C to zero.

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