Cell C says is it is currently in discussions with more than one party over a potential acquisition of the business.
Cell C chief financial officer Zaf Mohamed told BusinessTech at Blue Label Telecoms offices in Sandton on Friday, that the group has been in ‘more than recent’ discussions with several potential buyers.
He said that the group is evaluating all offers, but could not elaborate further because the matter is of a sensitive nature.
Bloomberg reported in January, that the mobile operator has put core parts of the business up for sale as it struggles with R9 billion of debt and deepening losses.
Cell C’s fibre-optic network is among the assets up for grabs, Bloomberg said, citing people familiar with the matter.
The carrier is also in talks to sell access to some of its wireless frequencies to larger rival MTN Group, said the people, who asked not to be named as the plans are private.
The asset sale has attracted interest from MTN, Vodacom Group and Telkom, the former state landline monopoly that’s growing its mobile business, said the people. All three declined to comment.
“Cell C will look at any opportunity that will assist with the company’s long-term viability and sustainability. Any opportunity needs to undergo a due diligence process that takes into account all stakeholders,” a spokesperson said at the time.
Bloomberg also reported that Vodacom was in talks with Cell C about taking on its contract-paying mobile-phone customers, while rumours also surfaced that China Mobile was in discussions to buy a stake in the troubled operator.
In November, Telkom has withdrew its cautionary announcement relating to the potential acquisition of Cell C, notifying shareholders that mobile operator had rejected its offer.
However, in December, Bloomberg reported that Cell C’s creditors weren’t ready to give up on a takeover offer from Telkom
It reported that senior debt holders hired investment-banking firm Moelis & Co and corporate lawyers Linklaters LLP and DLA Piper LLP to lobby for the Telkom proposal, again, citing people familiar with the matter.
In its results presentation on Friday, Blue Label Telecoms, which bought a 45% stake in Cell C in 2017 for R5.5 billion, stressed the importance of Cell C’s roaming agreement with MTN.
The long-form agreements were signed by Cell C and MTN on 18 November 2019, subject to certain conditions precedent.
If successfully implemented, the national roaming agreement will result in substantial cost-savings for Cell C by reducing network and capex spend, Blue Label said.
A recapitalisation of Cell C and/or a debt restructuring is essential in order to avoid further default on debt repayments when due.
“A capital restructure programme is in process and if successfully implemented would have a positive impact on Cell C’s solvency and liquidity position, Blue Label said.
“These ongoing matters cast significant doubt over Cell C’s ability to continue as a going concern” Blue Label warned.
In January 2020 Cell C noted that it had defaulted on the payment of interest on its $184 002 000 note which was due in December 2019.