Net1 caps investment in South Africa’s Cell C at 15% stake

PUBLISHED: Thu, 01 Jun 2017 11:14:13 GMT

JOHANNESBURG (Reuters) – Net1 UEPS Technologies will invest 2 billion rand ($153 million) for a 15 percent stake in debt-ridden South African mobile operator Cell C, scaling back its commitment in the original deal to take over the company.

Net1, a payments company with extensive operations in emerging markets, is part of a group led by Blue Label Telecoms, an airtime distributor, working to cut Cell C’s debt to 6 billion rand from around 20 billion.

Net1 has however dropped its plan to take a stake in Blue Label as part of the deal.

Cell C, the number three mobile operator in Africa’s most advanced economy, has struggled the past decade to compete in a mature market where Vodacom and MTN hold sway.

“Net1 and Blue Label have agreed that Net1 shall confine its investment to a total amount of 2.0 billion rand, which will be invested into Cell C,” Blue Label said in a statement.

Net1 will no longer subscribe for the Blue Label shares, both companies said in separate statements.

Net1 had previously said it would buy 2 billion rand worth of Blue Label shares and pay a further 2 billion rand for a 15 percent stake in Cell C.

The airtime distributor said it has signed agreements with other investors to take Net1’s place and subscribe for 2 billion rand worth of Blue Label shares.

Blue Label said last year it would pay 5.5 billion rand for a 45 percent holding in Cell C, a company founded in 2001 by Saudi Arabia’s Oger Telecom and former director Zwelakhe Mankazana. ($1 = 13.0715 rand)

(Reporting by TJ Strydom; Editing by Keith Weir)

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.