Johannesburg – Cell C has rejected a bid from Telkom,
which had reportedly offered R13 billion to buy the debt laden cellular company
out.
In a statement, chairman of SA’s third mobile operator, Mohammed
Hariri, said Cell C is already involved in a deal with Blue Label.
Under the Blue Label agreement, which dates back to
October, the prepaid service provider will pay R5.5 billion for a 45 percent
stake in Cell C.
That deal is part of Cell C's efforts to pay down debts
which last year forced it into a restructuring with bondholders involving a
three-year maturity extension to July 2018.
Cell C, founded in 2001 by Saudi Arabia's Oger Telecom,
has struggled to compete against established players Vodacom and MTN Group.
Following Blue Label's deal, Cell C will also issue new
shares to staff, senior management and existing shareholders to help to reduce
it borrowings to a maximum of R8 billion, said Blue Label at the time.
Separately, Net1 UEPS Technologies said it had entered
into an agreement with Blue Label to subscribe for about 117.9 million shares
for R2 billion. Net1 will own about 15 percent in Blue Label and expects to
settle the transaction through a combination of cash, debt plus an equity issuance
of five million shares, the company said.
Read also: Telkom said to mull R13bn bid for Cell C
Last week, Bloomberg – quoting sources – reported that
Telkom was looking at a bid worth as much as $1 billion for Cell C.
Hariri, noting that Telkom had submitted received an
unsolicited, non-binding and conditional proposal, said the board has a
responsibility to be transparent and keep staff, customers and stakeholders
informed around news reports on potential mergers.
Hariri explains that Cell C has “undertaken to not enter
into any agreement, incur any obligation or take any action which may restrict
it or any of its affiliates from complying with its obligations under such
agreements or which could result in the transactions envisaged in such
agreements not proceeding to completion.
“Cell C has every intention of complying with its
obligations under such agreements.”
As a result, Hariri says, Cell C has told Telkom that it
is “unable and not willing to pursue any discussion and has rejected its
proposal”.
Blue Label’s deal has an end-February deadline.
Telkom, 39 percent owned by the South African government,
held talks with Cell C’s owner Oger Telecom in 2015 about buying Cell C but
failed to agree on a price.
Telkom has been restructuring and streamlining its
operations in a bid to counter falling demand for fixed phone lines. Its mobile
arm has finally turned profitable on an operating level and its plan is
starting to take off.
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