South Africa’s Blue Label Telecoms Ltd. is considering taking a controlling stake in the nation’s fourth-largest wireless carrier as it seeks to have more say in a company in which it is already the largest shareholder.
(Bloomberg) — South Africa’s Blue Label Telecoms Ltd. is considering taking a controlling stake in the nation’s fourth-largest wireless carrier as it seeks to have more say in a company in which it is already the largest shareholder.
Blue Label could convert debt held in a special purpose vehicle to equity after it participated in a recent recapitalization of Cell C Ltd., its founder and co-Chief Executive Officer Brett Levy said in an interview. The business is valued at 3 billion rand ($164 million), he added.
“We will be looking at the possibility of taking control of Cell C,” Levy said. “Right now, we are in no man’s land, where we have a big percentage of the company and hold the majority of the debt with no control.”
Blue Label acquired a 45% stake in Cell C for 5.5 billion rand in 2017 during a restructuring process that also created three special purpose vehicles to store the distressed company’s debt. It further boosted its interest after a recapitalization at the end of 2022 that reduced Cell C’s debt from about 10 billion rand to 4 billion rand, Levy said.
Boosting its stake to over 50% would allow Blue Label to consolidate Cell C onto its books and avoid double counting its debt, he said. Other shareholders in the company include Nedbank Group Ltd., Gramercy Capital Management Corp., and Lesaka Technologies Inc.
Blue Label says it sells about 60% of South Africa’s prepaid airtime, which allows mobile users to purchase minutes ahead of time and is a popular alternative to more costly monthly contracts in many developing markets. Cell C is also a major prepaid provider, but has struggled to grow in a market dominated by the larger operators MTN Group Ltd. and Vodacom Group Ltd.
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