Blue Label seeks new strategic investor for Cell C

Blue Label Telecoms, which is seeking control of Cell C, wants to bring in a new strategic investor into the mobile operator in which it currently holds a 49.5% stake.

That’s according to Blue Label co-CEO Brett Levy, who was speaking to TechCentral in a wide-ranging interview on the TechCentral Show (TCS) to be published on Tuesday afternoon.

Levy’s comments follow the announcement last week that Blue Label will apply to the Competition Commission and communications regulator Icasa to take its shareholding in Cell C beyond 50%, a move that will give it control of the company for the first time.

In the TechCentral interview, Levy – who is joined on the show by his brother, co-CEO Mark Levy – said in response to a question about the future of Cell C: “Cell C will have a ‘big brother’. Whoever that may, that is coming – another investor, for sure.

“And it will be a value-adding investor. It will not be a money person; it will be someone who adds value in strategy,” he said. “It could be a bank or a retailer or another network, but it will be a strategic partner. And I don’t see that in five years, I see that in the next two to three years.”

Levy described Cell C as an “important cog” in the Blue Label machine. But, he said, Cell C “needs a ‘bigger bigger brother’ than Blue Label… We thought we were the big brother, [but] we became the little brother [and] now we need big brother. It will be a nice combination with us in it, and someone else.”

Cell C recap

The move to bring in a new strategic investor comes a year after Blue Label led a second recapitalisation of Cell C following its initial investment six years ago of R5.5-billion in the company, which bought it a 45% stake. Blue later wrote down the carrying value of that stake to nil after a turnaround strategy led by a previous Cell C management team did not deliver the expected results.

Levy said the strategy for Cell C this time is very different, with a far greater chance of success. Cell C no longer operates its own radio access network, for example, relying instead on the networks of MTN (for prepaid) and Vodacom (for contract customers), he said. This has reduced its costs, and meant it no longer has to try to compete with the capital expenditure of its bigger rivals.

Read: What’s really happening at Blue Label as shares sink

The full TCS interview with Blue Label will be published on Tuesday afternoon. Subscribe on YouTube or your favourite podcasting app – simply search TechCentral – and never miss an episode.  – © 2023 NewsCentral Media

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