Cell C wants to delay payments as it looks to restructure its debt

South African wireless carrier Cell C has begun talks to delay debt payments and hired consultants to probe its business practices and advise on a restructuring, sending shares in its biggest investor to a decade low.

Cell C is labouring under R8.9 billion ($639 million) of debt and trying to secure new funding from a consortium of investors. The company has begun a round of cost cuts, has frozen hiring and is reviewing its contracts, wrote Douglas Craigie Stevenson, Cell C’s chief executive officer, in an open letter.

Cell C has struggled to compete with Vodacom Group Ltd. and MTN Group – well established carriers that control the bulk of the South African market in wireless services and operate the biggest networks. It has R2.6 billion of debt maturing in August next year.

“We are engaging with our lenders to re-term our debt and allow us sufficient time to implement the Buffet transaction,” Craigie Stevenson wrote in an email reply to questions from Bloomberg, referring to the funding talks with the Buffet Group.

Cell C has paid R116 million in interest due to bondholders for June and a further R90 million on another funding arrangement with local banks, added Craigie Stevenson, who replaced CEO Jose dos Santos earlier this year.

Shares in Blue Label Telecoms which led a recapitalization of Cell C almost two years ago and holds a 45% stake in the carrier, fell more than 15% to their lowest since 2008.

PricewaterhouseCoopers will audit Cell C’s procurement practices and review processes, and law firm Bowmans will investigate any irregular business practices, according to the letter. Deloitte has been named as an independent financial restructuring adviser.

“Cell C has a zero-tolerance policy towards illegal or unethical activity,” Craigie Stevenson wrote in the letter.

Read: South Africa’s best mobile network: Vodacom vs MTN vs Cell C vs Telkom vs Rain

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Cell C wants to delay payments as it looks to restructure its debt