Competition Commission green lights Blue Label taking control of Cell C

The Competition Commission has given its stamp of approval for Blue Label Telecoms subsidiary The Prepaid Company to take a controlling stake in Cell C.

It recommended to the Competition Tribunal that it approve the transaction with conditions.

“The Commission has recommended that the Tribunal approves the merger subject to conditions to mitigate information exchange concerns,” it stated.

It also recommended conditions ensuring the continued use of certain prepaid airtime distribution channels for a period after the transaction.

“The proposed transaction does not raise public interest concerns,” the Commission stated.

Blue Label and Cell C applied to South Africa’s various regulators to increase The Prepaid Company’s controlling stake in the ailing mobile network operator from 49.53% to 63.19%.

In a letter to telecommunications regulator Icasa, Cell C explained that The Prepaid Company had injected funding of R5.5 billion into the operator, settled creditors’ claims, and granted it a R1.03 billion loan.

After its most recent cash injection into Cell C, The Prepaid Company effectively has a 63.19% stake in the mobile operator.

However, its voting power is capped at 49.53% until it gets approval from Icasa and the Competition Tribunal to take a controlling stake.

Despite having a large percentage of the shareholding in Cell C and holding the majority of the debt, Blue Label Telecom does not have control or an effective say over the management of Cell C, the company explained.

“Through its shareholding and financial assistance to Cell C, [Blue Label] has both significant exposure to Cell C and a vested interest in ensuring that Cell C succeeds and would like to ensure that the value invested in Cell C is protected,” the company said.

“The Prepaid Company requires a controlling interest in Cell C so that it has the ability to control its recovery, given the huge investment [it] has made.”

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Competition Commission green lights Blue Label taking control of Cell C