Blue Label Telecoms continues to be awaiting Competitors Tribunal approval for its plan to take voting management of Cell C, however that hasn’t stopped it from growing its financial curiosity within the cell operator by an additional 10 proportion factors.
Alongside its interim monetary outcomes for the six months to end-November 2024, printed on Thursday, JSE-listed Blue Label revealed the elevated financial curiosity within the enterprise.
In 2022, Cell C transferred its debt to a brand new entity known as SPV5 in change for the latter proudly owning 10% of Cell C. Blue Label assured the debt compensation, and one other firm, The Pay as you go Firm, a Blue Label subsidiary that holds the group’s stake in Cell C, agreed to supply R275-million to SPV5 to assist repay the debt. The debt will probably be settled in tranches between December 2024 and December 2026.
“Blue Label issued a assure in favour of the lessor for the compensation of this debt, whereas TPC dedicated to offering R275-million in funding to SPV5 in change for a declare of R699-million in SPV5, enabling it to satisfy its compensation obligations,” Blue Label mentioned.
On 31 December 2024, TPC superior the primary tranche of funding – an quantity of R100-million. The remaining funding commitments are scheduled as follows:
- R100-million on 31 December 2025;
- R50 million on 31 December 2026; and
- An extra R25-million on 31 December 2026, contingent upon the incidence of sure liquidity occasions.
“SPV5 is required to repay TPC for the quantities superior from any future sale of shares and/or from dividends earned thereon, together with an extra R424-million plus 50% of the honest worth of its 10% shareholding in Cell C, to the extent that the proceeds exceed R699-million,” Blue Label mentioned.
“Since SPV5’s solely asset is its shareholding in Cell C, the compensation will probably be depending on the disposal of those shares or dividends earned thereon. Because of this, as of 31 December 2024, TPC has successfully acquired an extra 10% financial curiosity in Cell C, capped on the compensation quantity. This funding will probably be fairness accounted, topic to the cap, alongside TPC’s present 63.19% financial curiosity in Cell C.”
Regulatory approvals
In December, TPC borrowed R311-million from Rand Service provider Financial institution, scheduled to mature on the finish of this month, at an rate of interest of prime plus 1%.
“TPC is within the closing phases of securing an extension previous to the maturity date, which can prolong the ability for an extra 18 months, with repayments in equal month-to-month instalments commencing on 31 March 2025.”
Blue Label, by TPC, holds 49.5% of the voting rights in Cell C and might appoint 4 of its 12 administrators, the place every director has one vote. Blue Label in January acquired the inexperienced mild from communications regulator Icasa to take management of Cell C.
Learn: Blue Label shouldn’t be ‘stripping’ Cell C’s belongings, Icasa hears
Nonetheless, the events have been ready 10 months — and counting — for the Competitors Tribunal to present its go-ahead — or not — for the deal to proceed. The Competitors Fee really useful final April already that the transaction be accepted.
The tribunal just lately defended itself towards criticism that it’s taking too lengthy to probe mergers and acquisitions within the ICT sector. In response to questions from TechCentral, it mentioned: “The tribunal is enjoined to conduct its hearings in accordance with the ideas of pure justice, which implies affording all of the events a possibility to entry the file, to request discovery of paperwork, to file their papers together with submitting factual witness statements and financial skilled witness statements, earlier than listening to the matter. These processes take time and are within the nature of authorized proceedings.”
“It bears point out that within the yr to this point (April-December 2024), 99% of mergers filed with the tribunal have been heard throughout the required time frames. Within the monetary interval 2023/2024, the tribunal heard 94% of mergers throughout the stipulated time frames,” it mentioned.
The tribunal mentioned that within the Cell C case, it needed to schedule in intervention purposes by MTN, Vodacom, Pepkor (a retail group) and CellSAf (a Cell C shareholder). The purposes have been heard by the tribunal in July and August 2024, with all however Vodacom’s utility being granted. The tribunal mentioned this takes time.
“For every matter, a timetable is about that makes provision for third events who want to intervene, to take action; different interlocutory issues raised by events and discovery processes; the submitting of factual and skilled witness statements; and listening to dates. Listening to dates rely, inter alia, on the provision of all events and their authorized representatives and financial specialists,” it mentioned. – © 2025 NewsCentral Media
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