Cell C’s merger deal with Blue Label’s CEC approved

The Competition Tribunal has unconditionally approved the proposed merger in which Cell C will acquire Comm Equipment Company (CEC) from The Prepaid Company (TPC).

This, after the Competition Commission last week recommended that the Competition Tribunal approve the deal without conditions.

Following the transaction, Cell C will exercise sole control over CEC.

The move follows Blue Label Telecoms – Cell C’s majority shareholder – recently announcing plans to potentially list the mobile operator on the JSE as part of a broader business restructuring.

This, as the JSE-listed Blue Label Telecoms is exploring strategic options to unlock value for shareholders.

Blue Label currently holds a non-controlling 49.5% stake in Cell C, but aims to gain an additional 4.04% through its subsidiary, TPC to secure control of South Africa’s fourth-largest mobile operator.

Under the restructuring plan announced in May, Cell C will acquire 100% of CEC, a wholly-owned Blue Label subsidiary, from TPC, in exchange for additional Cell C shares.

In a statement today, the Competition Tribunal says Cell C, which is not controlled by any firm, operates in the telecommunications sector, primarily providing mobile services to businesses and consumers.

Through its subsidiary, Cell C Service Provider Company, it sells SIM cards and accessories to prepaid and postpaid subscribers, says the competition watchdog.

For its postpaid business, Cell C has relied on CEC to manage sales, marketing, support and administrative services, it adds.

CEC is a wholly owned subsidiary of TPC, itself wholly owned by Blue Label Telecoms. CEC provides postpaid sales services (contract renewals), marketing, administrative support and back-office services for Cell C. It also sources and sells handsets to Cell C postpaid subscribers, it concludes.