Blue Label closes in on Cell C, 3G Mobile deals

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Blue Label Telecoms co-CEO Brett Levy.
Blue Label Telecoms co-CEO Brett Levy.

JSE-listed Blue Label Telecoms' shareholders have given a green light to the company's move to acquire a 45% of SA's third largest mobile operator Cell C for R5.5 billion, as well as the acquisition of mobile phone and tablet distributor 3G Mobile for R1.9 billion.

Blue Label shareholders had a general meeting yesterday voting on the imminent R7.4 billion deals. Both deals are being done via Blue Label subsidiary, The Prepaid Company.

In a SENS statement issued this afternoon, Blue Label says closing of the Cell C recapitalisation is anticipated to commence on Tuesday, 1 August 2017, and as a result, Cell C's net borrowings will be reduced to a maximum of R6 billion, and the Cell C recapitalisation will be complete.

Blue Label plans to acquire 45% of SA's third largest mobile operator for R5.5 billion. The mobile operator announced its recapitalisation plans on 10 December 2015.

"As a result, Blue Label will undertake the Cell C vendor consideration placement by placing 183 333 333 authorised but unissued Blue Label shares with committed third party investors, in terms of the relevant subscription agreements, at a price of R15 per Blue Label share so as to raise R2.75 billion to part fund the participation by Blue Label, through its wholly-owned subsidiary The Prepaid Company, in the Cell C recapitalisation," says Blue Label.

It adds that following the general meeting, the initial acquisition by Blue Label through its wholly-owned subsidiary, The Prepaid Company, of 47.37% of the issued share capital of 3G is anticipated to close on Friday, 28 July 2017.

As a result, Blue Label will undertake the 3G acquisition issue by issuing 16 666 666 authorised but unissued Blue Label shares to the shareholders of 3G at a price of R15 Blue Label share, as R250 million part payment towards the 3G purchase consideration.

Subject to approval by the JSE, the listing and trading of 199 999 999 new Blue Label shares is expected to commence on or about Thursday, 3 August 2017, it notes.

3G Mobile supplies and distributes mobile phones and tablets to major retailers across SA and Sub-Saharan Africa.

It operates in eight African countries, with offices in SA, Namibia, Botswana and Mauritius, and distribution channels into Zambia, Zimbabwe, Swaziland and Lesotho. It has distribution rights for all major tier one and tier two mobile device and handset manufacturers, including Apple, Samsung, Huawei, HiSense, ZTE and Nokia.

Blue Label's co-CEO Brett Levy recently told ITWeb that its plan to acquire mobile device distributor and financier, 3G Mobile, will give it scope into African markets outside of SA.

Meanwhile, according to a report by Bloomberg, Cell C plans to raise as much as US$464m (R6 billion) from the sale of two bonds as part of the South African mobile phone company's recapitalisation that will enable Blue Label Telecoms to buy a stake.

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