Johannesburg - Net1 UEPS Technologies
on Wednesday announced that it had offered to acquire a 15 percent interest in mobile operator Cell C for R2 billion.
Net1’s offer completes the structure of the “binding umbrella” agreement that JSE-listed prepaid specialist, Blue Label Telecom, announced on Monday.
The announcement confirmed the identity of an unnamed “third party” investor who wanted a 15 percent stake in Cell C.
“[Net1] is also a party to the umbrella restructure agreement with Cell C and has offered to acquire a direct stake of 15 percent of the issued share capital of Cell C for a
consideration of R2 billion,” said Net1.
The sale of stakes in Cell C is part of efforts to slash the mobile operator’s debts from R20 billion to R6 billion.
Blue Label on Tuesday confirmed that it was proceeding with plans to buy a 45 percent stake in Cell C for R5.5 billion.
Net1 also announced that it had concluded a memorandum of understanding to acquire 49.6percent of DNI-4PL Contracts, a distributor of Cell C’s mobile user starter packs and prepaid airtime through a network of field operatives and agents.
The company said it had an option to acquire a controlling stake in DNI in future.
Net1 said the two proposed investments in Cell C and DNI were subject to conditions, including the satisfactory completion of due diligence, the required internal and external approvals and the execution of definitive transaction agreements.
It said it would use a combination of surplus cash, debt and new equity placement to settle the payment of the two investments.
Read also: Blue Label rejects speculation on Cell C deal
“The combination of the diverse technological, commercial and logistical capabilities of Net1, Blue Label, Cell C and DNI provides a substantial and compelling business case for us," it said.
"We are very excited about concluding these transformational transactions and will provide further details regarding the rationale for these transactions, the final consideration paid and the funding structure when the transactions close,” said Net1 chairman and chief executive, Serge Belamant.
Net1 is currently at the centre of the controversy around the fate of social grants payments.
Net1’s subsidiary, Cash Paymaster Services (CPS), administers the social grants payments of more than R140 billion to more than 17 million beneficiaries.
The current contract expires at the end of this month.
The South African Social Security Agency (Sassa), the government agency responsible for delivering social services in South Africa, on Tuesday filed an application to the Constitutional Court for permission to extend the contract with CPS for another year.
But Sassa on Wednesday withdrew the application, deepening confusion about what will happen to grant payments with effect from April 1.