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Johannesburg - Net1 UEPS Technologies reiterated on Thursday that it will continue to pursue its acquisition of a 15 percent stake of Cell C for a cash consideration of R2 billion, but now through surplus cash and debt. 

Net1 was a party to the umbrella restructure agreement with Cell C in which it was going to buy a 15 percent stake in Blue Label Telecoms worth R2 billion, while in turn, Blue Label was to buy a 45 percent stake in Cell C for R5.5 billion. 

The sale of stakes in Cell C is part of efforts to slash the mobile operator's debts from R20 billion to R6 billion. But Blue Label and Net1's subsidiary, Net1 Applied Technologies South Africa, have since mutually agreed that Net1 SA would not buy shares in Blue Label and that agreement has therefore been terminated. 

Net1 said it has also been released from its R2 billion guarantee that was issued by FirstRand Bank Limited, acting through its Rand Merchant Bank division, in favour of Blue Label. Another strategic acquisition in Net1's eyesight is that of a 49.6 percent stake 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. 

Net1 said it had concluded a memorandum of understanding to buy DNI-4PL Contracts stake. This would be in addition to the 15 percent stake at Cell C. "The company continues to make substantial progress toward finalising terms to acquire a non-controlling interest in DNI-4PL Contracts, with an option to acquire a controlling stake in DNI in the future," Net1 said. Net1 is currently at the centre of the controversy around the distribution welfare grants payments in South Africa. 

A recent affidavit by auditing firm KPMG revealed that Net1 made R1 billion in profit from its unlawful contract with the South Africa Social Security Agency (Sassa) over a period of five years. Net1 subsidiary, Cash Paymaster Services (CPS), maintained a 12.2-percent profit margin giving out social grants, a KPMG audit showed. CPS administers the social grants payments of more than R140 billion to more than 17 million beneficiaries. 

The proposed investments in Cell C and DNI by Net1 are subject to certain conditions, including the satisfactory completion of due diligence, the required internal and external approvals and the execution of definitive transaction agreements. Net1 said it intended to settle the purchase consideration for these two investments using a combination of surplus cash and debt. 

Meanwhile, Net1 appointed veteran IT executive Alfred Mockett as an independent non-employee director who would also serve on the nominating and corporate governance, audit and remuneration committees from Thursday. Net1's board now comprises one executive and four independent directors and the company expects to announce additional appointments in due course.