Cell C coming in with more firepower following Blue Label deal

Cell C customers can look forward to a company with more firepower and lots of ideas and innovation, following the completion of its deal with Blue Label Telecoms.

This is according to Blue Label joint CEO Brett Levy, who spoke to MyBroadband about the plan going forward for Cell C.

Blue Label recently entered a binding agreement with Cell C for a subscription for 45% of the share capital of the network operator for R5.5 billion.

The agreement is scheduled to be finalised by no later than 30 June 2017.

Levy said the best way to improve the position of consumers is to put more horses in the race, and he sees Cell C playing a pivotal role as the “third network” in South Africa.

“Cell C does not want to take on Vodacom or MTN. If networks are spending R14 billion and you’re spending five [billion rand on infrastructure]… to go and fight on price and fight on the wrong things, I think the third network will be the loser all the time,” he said.

Instead, he said Cell C’s objective must be to pick a strategy about what the network will do and who it will target, and executive it with great products, service, marketing, and sales.

“That way you are focused on what you do, and you get a nice piece of the pie. It is not about being everything to everybody,” he said.

Levy said if Cell C puts out great products and targets the right market segments, the network will grow.

This includes both the consumer and business markets.

Not all smooth sailing

The deal between Blue Label and Cell C has faced several challenges along the way, the latest of which was legal action and reported threats from Cell C’s black equity partner CellSAF.

CellSAF holds a 25% stake in the firm that owns Cell C, 3C Telecommunications, and has threatened to prevent the deal from going through.

Its chairman, Mathews Phosa, said the deal will dilute Cell C’s black equity – which would be “illegal and improper”.

Levy said the CellSAF issue is a “shareholder fight” which Blue Label was dragged into.

“Shareholders need to sit around a table and sought out their differences,” said Levy.

Why Cell C?

With Blue Label’s exposure to multiple local networks through airtime and other distribution agreements, questions about why Cell C was chosen as an investment target were raised by industry stakeholders.

Mark Levy, joint CEO of Blue Label, and Brett said there were three reasons they chose Cell C.

  1. An equity investment. The asset was seen as fair value and it will provide a return.
  2. Eliminating disintermediation, as Blue Label will be involved in more aspects of the network.
  3. Vertical integration. “We have lots of products which mobile networks consume. It creates an opportunity to bring more products and services to the network.”

The CEOs said the telecoms market is going to become “a backhaul” for the country, with “everything” set to be transferred over telecoms networks.

“We want to become part of the network.”

The brothers said they never envisioned owning a large share in a network, but the move allows them to become a producer of products – strengthening their distribution play.

Regulation

Another matter Blue Label may have to deal with is the government’s ICT Policy White Paper – which proposes the reclaiming or privately-held spectrum and the establishment of a single open-access network which operators share.

Levy said you cannot stop networks from growing through spectrum, and that the government and the regulatory authorities need to provide networks with more spectrum.

This could be achieved through network and spectrum sharing, as long as it makes makes the playing field equal to all, he said.

“Don’t penalise the big [networks] and don’t penalise the small [networks]. You do it in a ratio that works.”

Now read: Telkom vs Cell C in huge-value shared data plan showdown

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Cell C coming in with more firepower following Blue Label deal