Competition Commission Gives Green Light for Blue Label to Take Control of Cell C

In a significant development in South Africa's telecommunications landscape, the Competition Commission has granted approval for Blue Label Telecoms subsidiary, The Prepaid Company, to acquire a controlling stake in Cell C. The decision comes with certain conditions recommended by the Commission to mitigate potential concerns.

The Commission's approval paves the way for the acquisition, subject to conditions aimed at addressing information exchange issues and ensuring the continued use of specific prepaid airtime distribution channels post-transaction. Notably, the Commission stated that the proposed merger does not raise any public interest concerns.

Blue Label and Cell C sought regulatory approval to increase The Prepaid Company's stake in the struggling mobile network operator from 49.53% to 63.19%. Cell C, in a letter to the telecommunications regulator Icasa, outlined The Prepaid Company's substantial financial contributions, including a R5.5 billion injection into the operator, settlement of creditors' claims, and a R1.03 billion loan.

With the latest cash infusion, The Prepaid Company effectively holds a 63.19% stake in Cell C. However, its voting power remains capped at 49.53% until it receives approval from Icasa and the Competition Tribunal to assume a controlling interest.

Despite holding a significant portion of Cell C's shares and being the primary creditor, Blue Label Telecom clarified that it does not exercise direct control over the management of Cell C. The company emphasized its vested interest in Cell C's success, given its substantial investments and financial assistance.

Blue Label explained that The Prepaid Company seeks a controlling interest in Cell C to facilitate its recovery and protect its considerable investment in the mobile operator. This move is seen as a strategic step towards ensuring the long-term viability and sustainability of Cell C amid the challenging telecommunications landscape in South Africa.

The approval from the Competition Commission marks a crucial milestone in the acquisition process, signaling a positive development for Cell C and its stakeholders. With the recommended conditions in place, the acquisition is expected to proceed, potentially reshaping the dynamics of the telecommunications sector in South Africa.