Cell C exploring sale: report

Cell C is working with Goldman Sachs to explore its options in SA, including a possible sale, Bloomberg reports.

Citing sources familiar with the matter, Bloomberg said the possible sale would be to “domestic competitors”.

Cell C is 75% owned by Dubai-based firm Oger Telecom, which is itself 35% owned by Saudi Telecom.

In January 2015 Saudi Telecom wrote off a R1.2 billion investment in Oger, attributing the impairment to its investment in Cell C.

Cell C’s financial woes are well-known within the industry, and its battles – including campaigns against the dominance of other players, as well as layoffs and network issues – have been highly publicized over the past few years.

Cell C has long indicated that it is not opposed to being acquired by another company.

Former Cell C CEO Alan Knott-Craig was vocal in his stance that there is no room for four mobile operators in South Africa, and that consolidation between firms was inevitable.

As early as 2012, speculation was rife that Cell C was in talks with parties over a possible sale.

At the time, rumours pointed to a possible merger between Cell C and Telkom. Cell C later confirmed that talks had taken place.

The operator has also been linked to infrastructure-sharing talks with MTN, as well as banking group FNB.

Stiff competition

Cell has come under increasing pressure over the past few years, faced with strong competition from larger players such as Vodacom and MTN.

Both Vodacom and MTN have made moves to entrench their dominance in the market through acquisitions and partnerships.

Vodacom is in the process of acquiring fixed-line operator Neotel, while MTN and Telkom are finialising an agreement which would see MTN take control of Telkom’s radio-access network.

Cell C is opposing both of these partnerships on the basis that it would be anti-competitive.

Responding to the sales talk, Cell C said it could not comment on shareholder matters.

However, Oger Telecom provided the following statement on the matter:

Oger Telecom Limited, the controlling shareholder, is fully committed to Cell C and its growth plans. This support is clear from the USD450 million of equity invested in the business over the past 24-months.

This investment has been significant to help Cell C improve its network infrastructure and support the rollout of its LTE network.

We are pleased with the progress made by the company over the last 2 years, and Cell C continues to have sufficient resources to meet its near term obligations.

As a result of the new initiatives implemented by management, Cell C’s subscribers grew from 10.2 million (Jan 2013) to close to 20 million (Jan 2015) and its revenue market share has increased from 9% to 12% which has resulted in a material improvement in the company’s financial performance in 2014.

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Cell C exploring sale: report