Sale of Cell C assets to Gatsby approved subject to conditions
The commission said it had approved the sale to Gatsby Special Purpose Vehicle (SPV) on condition that the transaction would not be controlled by companies that competed or had a customer-supplier relationship with Cell C, other than a lending relationship.
Gatsby SPV was established in March exclusively to enter into the proposed transaction and would be controlled by a trust that was yet to be formed.
The commission said the trust would hold the entire issued share capital of Gatsby and not provide any services or products.
It said that it found that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition in any relevant markets.
“The commission further found that the proposed transaction does not raise any other public interest concerns,” said the commission.
Cell C, South Africa’s third-biggest mobile operator, said that it remained cautiously optimistic until the deal had been fully concluded and all requirements had been met.
Chief executive Douglas Craigie Stevenson said that a recapitalisation was an important pillar of Cell C’s turnaround strategy.
“We are being diligent and thorough to ensure it is a transaction that meets all conditions and continues to engage with all stakeholders,” Craigie Stevenson said.
“In our minds it is not done and there is still work to do, but we are pleased with the progress to date.”
The commission said it noted that the merging parties were currently not in a position to confirm who would be appointed as trustees. It said this would raise concerns, including anti-competitive information exchange should the trustees have individuals from firms that compete with Cell C or present undisclosed competitive overlaps.
“These concerns were not considered in the assessment of the proposed transaction because the trustees have not yet been appointed.
"To remedy this potential risk, the commission recommended that the proposed transaction be approved subject to conditions that Gatsby and or the trust would not be controlled by companies that compete or may compete with Cell C or firms that have a customer-supplier relationship with Cell C, other than a lending relationship,” it said.
The market speculated that Cell C would merge with MTN because of the extended roaming agreement between the parties.
However, the commission said the agreement did not constitute a merger.
It said it recommended that the Competition Tribunal approve the deal with the conditions.
Director for pricing research at Africa Analysis, Ofentse Dazela, said Gatsby SBV’s only listed director, Brett Levy, was the same director and equity owner in Blue Label Telecoms.
“The key question is why Buffet Consortium has not acquired the minority stake it had planned to acquire in the company to this point?
“This could imply that Cell C does not have a clear strategy that convinces Buffet Consortium it will soon be able to pull itself out of the current debt hole it is buried in,” Dazela said.