Net 1 Buys Blue Label Stake in $400 Million Deal for Cell C

JOHANNESBURG (Capital Markets in Africa) – Blue Label Telecoms Ltd. will buy a 45 percent stake in Cell C (Pty) Ltd. for 5.5 billion rand ($400 million) to expand the network of South Africa’s third-largest mobile-phone operator and reduce the target company’s debt.

As part of the deal, electronic-payment provider Net 1 UEPS Technologies Inc. agreed to subscribe for 118 million Blue Label shares for 2 billion rand, giving the company a 15 percent stake in Blue Label, Net 1 said in a statement on Wednesday. The deal and recapitalization of Johannesburg-based Cell C will be done on Nov. 18, helping to reduce the company’s debt to 8 billion rand, it said.

“The recapitalization provides the company with a sustainable growth platform,” Cell C Chief Executive Officer Jose Dos Santos said in a separate statement. “This is a transformational transaction for Cell C.”

The deal will help support Cell C as the company tries to compete with competitors Vodacom Group Ltd. and MTN Group Ltd., which dominate the South African mobile-phone market. The terms are different from the one Blue Label agreed to in December, when the company said it would buy a 35 percent of Cell C.

Blue Label shares rose 2.6 percent to 19.04 rand as of 9:20 a.m. in Johannesburg, on track to close at the highest since Sept. 19.

Cell C management and staff will subscribe for 25 percent of the company and 3C Telecommunications, previously Cell C’s largest shareholder, will hold the remaining 30 percent of the total issued share capital. 3C is owned by Dubai-based Oger Telecom Ltd.