Blue Label Telecoms is poised to officially take control of Cell C, a telecommunications operator in South Africa, following the approval from the communications regulator, Icasa, for the transfer of the mobile operator’s spectrum and network licenses. This marks a significant milestone for Blue Label, which currently holds a 49.5% stake in Cell C and has been actively working to revitalize the struggling company.
The approval of the license transfer has generated considerable buzz in the market, leading to a notable surge in Blue Label’s share price, which recently reached a 52-week high of R6.20 per share on Thursday—an impressive 71% increase over the past year. Investors appear to be optimistic that a turnaround for Cell C could provide the much-needed boost for Blue Label.
However, it’s important to note that Cell C will not be completely relinquishing its licenses. According to Icasa, while Blue Label, through its subsidiary The Prepaid Company, will acquire a controlling 53.57% stake in Cell C, the mobile operator will continue to hold and operate its licenses. This arrangement allows Cell C to maintain control over its licensed services while enabling Blue Label to guide the company’s strategic direction.
Under the leadership of CEO Jorge Mendes, Cell C’s management is expressing optimism about the company’s potential recovery. Mendes has been actively implementing strategies aimed at steering the operator back on course, and this deal could prove to be a pivotal moment in that journey.
Initially, the license transfer faced some opposition. Cell C’s empowerment shareholder, CellSAf, voiced concerns regarding what they perceived as a potential “asset stripping” by Blue Label. However, Cell C clarified that the licenses would remain with the company; only the ownership structure is changing.
The Competition Commission had previously approved the deal last year, albeit with certain conditions to ensure fairness in airtime distribution and to mitigate any information-sharing concerns. The final step now lies with the Competition Tribunal, which is expected to provide its approval.
Overall, this transaction signifies a new beginning for Cell C and presents a significant opportunity for Blue Label to leverage the operator’s recovery. With growing investor confidence and a robust recovery plan in place, the impact of this deal on the South African telecommunications landscape will be closely watched.
