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)