(008274.77-E001840.93NAVRLOSUC20V)[The Big get bigger! Jan]
Cell C is set for a takeover
JOHANNESBURG – Cell C is set for a takeover by one of the largest network providers with the Competition Commission working on terms that could save the company to rescue the company and save jobs.
On Tuesday, the Competition Commission briefed parliament’s portfolio committee on trade and industry on Tuesday on the terms of the merger that would see Cell C being bought by the continent’s biggest network provider.
MTN dismissed speculation that it would merge with Cell C. “MTN does not comment on market speculation,” said a company spokesperson
Cell C yesterday (WED) confirmed the merger talks charging that they were part of the group’s restructuring process that began last year.
The group said it was in ongoing discussions with financiers and relevant stakeholders to finalise the transaction.
“These discussions are of a confidential nature. Cell C will make an announcement upon conclusion of its restructuring process,” said the company.
Cell C has been in distress for years with aR9 billion debt burden and several own goals which placed it on the backfoot of its rivals.
In March the group introduced a turnaround strategy focused on restructuring its balance sheet and improving its overall liquidity.
Cell C also negotiated an extended roaming agreement with MTN, to enable it to have access to MTN’s network in areas where it does not have coverage after moving away from Vodacom in favour of MTN’s infrastructure.
Cell C’s new chief executive Douglas Craigie Stevenson previously said that the roaming agreement was meant to manage its network capacity requirements in a more scalable and cost-efficient manner. “This will also provide access to current and future technologies,” he said.
Problems at Cell C resulted in JSE-listed Blue Label Telecoms which paid R5.5bn for a 45 percent stake in Cell C writing off their full equity ownership in the company to zero last year.
Cell C defaulted on repaying interest on an R2.7bn loan note which was due in December as well as interest and capital repayments related to the respective bilateral loan facilities with Nedbank , China Development Bank Corporation, Development Bank of Southern Africa Limited and Industrial and Commercial Bank of China Limited which was due in January 2020.
However in March Cell C said it was starting to see greenshoots its operating loss during the year ended December 2019 narrowed to R3.94 billion from R7.36 bn in 2018 on the plan to arrest cash burn.
Cell C reported a 21 percent decline in prepaid customers to 2.9 million in 2019, and said that the margin on existing customers was better as a result of acquiring profitable customers.
But the commission’s Commissioner Thembekile Bonakele told the portfolio committee on trade and industry on Tuesday that the ant-trust body was working on finalizing the terms of the merger.
“We have seen firms in distress which include an acquisition of Cell C. Cell C has been in trouble for a while now. We have a merger before us that we are finalizing, that should see Cell C being rescued and surviving and those jobs being saved,” Bonakele said.