Cell C in trouble for not following correct rules in recapitalisation
The Independent Communications Authority of South Africa (Icasa has stated that it plans to engage Cell C for its apparent failure to follow correct procedure in the company’s recent recapitalisation scheme.
In a statement issued on Wednesday evening, Icasa said that the company had filed for a change in licensee information under two separate Acts, neither of which were applicable to the procedure.
“The Authority has considered the notification and the preliminary view is that the Cell C recapitalisation transaction – on the face of it – triggers the provisions of Section 13 of the Electronic Communications Act of 2015 and ought to have been filed as an application for change of control of the licensee,” it said.
“The Authority is engaging Cell C to seek clarity on this apparent non-compliance with the legislative provisions. In addition, the Authority is also taking external legal advice on the matter, including on appropriate enforcement actions it can take to ensure compliance.”
On 7 August, Blue Label said that the Cell C recapitalisation has been fully implemented, resulting in Cell C’s Net Borrowings being reduced to below R6 billion.
Following the recapitalisation, Blue Label, through its wholly-owned subsidiary, The Prepaid Company, now owns 45% of the issued share capital of Cell C.
Cell C responded to the Icasa statement, saying that it was strange for the Authority to reach its stated conclusion without first hearing Cell C’s position. As such it would make “extensive submissions” and will engage with Icasa on the matter.
Cell C’s statement in full below:
Cell C is in the process of submitting extensive information to Icasa and is unclear why Icasa has reached the conclusion that the transaction “triggers the provisions of Section 13 of the Electronic Communications Act of 20015 (sic) and ought to have been filed as an application for change of control of the licensee” without first having heard Cell C’s position.
Cell C has received extensive legal advice and is comfortable that the recapitalisation does not amount to a transfer of control that would have required approval. The company is of the view that once Icasa, or whomever ultimately considers the transaction, has a proper understanding of it (which Cell C is at pains to provide), it will be clear that there has not been any transfer of control and that no approval is required.
Cell C also notes that Icasa has indicated that this is its “preliminary view” and it has not as yet given the company any indication (despite repeated requests from Cell C) why it has taken this view or what process it is following.
It is therefore difficult for Cell C to engage with Icasa’s views. Notwithstanding this, Cell C will submit detailed and extensive information to Icasa and welcomes the opportunity to engage further regarding this transaction that has ensured the survival of the company as a sustainable competitor in the sector, increased ownership by historically disadvantaged individuals and saved many thousands of jobs.
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