Cell C Head Office
Cell C Head Office (Photo Credit: Atterbury)

Cell C, South Africa’s biggest mobile phone operator, has rejected claims that its recapitalization process is not complying with the country’s legislative provisions.

The country’s third-biggest mobile phone operator recently announced its restructuring involving Net 1 and Blue Label Telecoms.

In a statement on Wednesday night, ICASA (Independent Communications Authority of South Africa), said it is seeking legal advice.

It added that the preliminary view is that the Cell C recapitalisation transaction – on the face of it – triggers the provisions of Section 13 of the Electronic Communications Act of 20015 and ought to have been filed as an application for change of control of the licensee.

Last week, Cell C’s empowerment partner CellSAf warned that the recapitalisation of the mobile phone operator amounts to a blatant attempt at corporate capture, and is likely to collapse under regulatory scrutiny.

Following a backlash over the deal, Cell C said the company is in the process of submitting extensive information to ICASA.

It added that it is unclear why the regulator has reached the conclusion that the transaction “triggers the provisions of Section 13 of the Electronic Communications Act of 20015 (sic) and ought to have been filed as an application for change of control of the licensee” without first having heard Cell C’s position.

The company said that it has received extensive legal advice and is comfortable that the recapitalisation does not amount to a transfer of control that would have required approval.

“The company is of the view that once ICASA, or whomever ultimately considers the transaction, has a proper understanding of it (which Cell C is at pains to provide), it will be clear that there has not been any transfer of control and that no approval is required,” the company said in a statement on Thursday.

Cell C also notes that ICASA has indicated that this is its “preliminary view” and it has not yet given the company any indication (despite repeated requests from Cell C) why it has taken this view or what process it is following.

“It is therefore difficult for Cell C to engage with ICASA’s views. Notwithstanding this, Cell C will submit detailed and extensive information to ICASA and welcomes the opportunity to engage further regarding this transaction that has ensured the survival of the company as a sustainable competitor in the sector, increased ownership by historically disadvantaged individuals and saved many thousands of jobs.”

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