By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s Blue Label said on Monday that it plans a group restructuring to facilitate the unbundling and potential listing of mobile operator Cell C.
Blue Label, whose main business is distributing prepaid airtime and electricity, said it has been considering various strategic options and initiatives to unlock and deliver value to its shareholders.
Blue Label said in May that it aimed to potentially list Cell C.
On Monday, it said “the Cell C listing together with the benefits to be derived from Cell C’s turnaround strategy and its improved sustainability, are expected to enhance the value of Cell C and in turn restore its shareholder value.”
The potential listing will also give Cell C, the fourth largest mobile operator in South Africa, access to capital markets on an independent basis and allow investors to value the telecoms business independently of Blue Label’s core prepaid distribution model.
Blue Label, which has been trying to dig Cell C out of debt since it bought a 45% stake in the operator in 2017, has a non-controlling 49.53% stake in the mobile operator.
Under Chief Executive Jorge Mendes, the once struggling Cell C has undergone two recapitalisations and a turnaround which includes selling all its towers and roaming on the networks of bigger rivals MTN and Vodacom.
Blue Label said the proposed pre-listing restructuring includes the conversion of various claims totalling 3.7 billion rand ($210.67 million) held by The Prepaid Company (TPC), a subsidiary of Blue Label, against Cell C into Cell C equity shares.
Airtime with a sales value of between 7.3 billion rand and 7.5 billion rand will be transferred from TPC to Cell C in exchange for shares and all shares in Comm Equipment Company (CEC) will also be transferred to Cell C in exchange for equity shares, the company said.
The implementation of the pre-listing restructuring and Cell C listing will remain subject to, among other conditions, approval by the boards of Blue Label and Cell C, requisite shareholder and regulatory consents, and favourable market conditions, the company said.
($1 = 17.5632 rand)
(Reporting by Nqobile Dludla; Editing by Susan Fenton)
