The Competition Commission has given the green light for Cell C to acquire Comm Equipment Company (CEC), a company specialising in services for contract customers, from Blue Label Telecoms.
The deal is part of Cell C’s push to internalise its entire customer operations, from marketing and supply chain to billing and collections. This is part of the company’s plan to list on the JSE later this year, putting in place the pieces that will allow it to be more self sufficient.
“The commission has recommended that the tribunal approves the proposed transaction whereby Cell C intends to acquire CEC, without conditions,” said the commission, which investigates market structures and antitrust, said.
CEC, through The Prepaid Company, is a wholly owned subsidiary of Blue Label Telecoms, Cell C’s largest shareholder. The company provides postpaid sales services, contract renewals, marketing and postpaid administrative support and back-office services for Cell C.
CEC also sources and sells handset devices to Cell C postpaid customers.
This deal brings this capability in-house for SA’s fourth largest mobile operator.
In May, Blue Label announced plans to spin off Cell C as part of the group’s restructuring in a move that would see all four of SA’s largest telecom companies listed on the local bourse.
Cell C has long harboured ambitions of going public — a plan first floated by former CEO Jose Dos Santos in 2018. However, this plan came to naught as the company struggled to make a profit — making its initial public offering a challenging prospect for investors.
Cell C has struggled to make a profit since it opened in 2001. It had been laden with long-term debt of R8.7bn, prompting Blue Label and Lesaka Technologies (formerly Net1), which previously had a 15% stake, to write down their combined R7.5bn investment to nil.
Four years after this writedown, Blue Label said in February 2023 it had revalued the Cell C investment on its books to R962.5m, showing evidence of some positive momentum in the mobile business.
Blue Label and Cell C are now working to put in place the structures and systems to make the listing a success, with the CEC deal being a key part.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market. The proposed transaction does not raise significant public interest concerns,” said the authority.
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