Cell C Campus - Waterfall City waterfallcity.co.za
Cell C Campus - Waterfall City waterfallcity.co.za

 As Cell C gets a nod from the country’s communications watchdog to recapitalise its business through a deal with Blue Label and Net 1, the mobile phone operator’s empowerment partner  CellSaf says Cell C must stop misleading the market.

On Wednesday, Cell C announced that its deal with Blue Label and Net 1 has been given a go-ahead by South Africa’s communications regulator, ICASA.  The mobile phone operator added that it welcomes ICASA’s confirmation that it followed the correct process in the notification of its recapitalisation transaction and that it has complied with all applicable regulations. 

CellSAf said on Thursday in a statement that it has noted the decision by ICASA to accept that Cell C’s notification of a change in the network’s shareholding is procedurally correct.

CellSAf added that it notes that ICASA has not provided reasons for its decision, and that the regulator has not yet dealt with the substance of the complaint against the Cell C recapitalisation.

The empowerment partner said ICASA has been considering CellSAf’s complaint since July 2017. In a subsequent press statement, the regulator indicated that it had legal advice in support of CellSAf’s complaint.   

CellSAf raised several issues with the proposed recapitalisation, including Cell C’s apparent contravention of its license conditions, legislation and regulations relating to prior approval of a change in control of a licensed entity, breaches of competition legislation and an unlawful reduction in B-BBEE shareholding and control.

In its November 29 letter to CellSAf, ICASA indicates that it has accepted Cell C’s notification of change of shareholding. However, the regulator provides no reasons for its finding, and indicates that it is still considering the remaining aspects of CellSAf’s complaint, to which it will respond “in due course”. 

CellSAf believes that ICASA may be putting the cart before the horse, since the complaint addresses the illegality of the recapitalisation itself, and if the deal is illegal then there’s no point in accepting the notification of change in shareholding.

CellSAf’s view is that ICASA must deal with the substance of the complaint before deciding on purely procedural questions. CellSAf is concerned that ICASA may be fatally undermining its own ability to execute its mandate. 

CellSAf chairperson Daphne Mashile-Nkosi, said in a statement, that it is too early to fully assess ICASA’s position on CellSAf’s complaint.

“We have serious concerns about a range of aspects of the recapitalisation as well as the processes followed by Cell C. Simply put, we think that the Cell C recapitalisation deal breaks the law,” she said.

“ICASA has taken a decision on one peripheral aspect, which is notification of the change of shareholding, but it has not provided its reasons, nor has it considered and ruled on the legality of the actual change in shareholding or any of the other aspects of our complaint. We’ll wait for ICASA’s reasons and its ruling on our complaint. “ 

Mashile-Nkosi continues: “We see that Cell C has already jumped the gun by claiming that the ruling addresses “all applicable Regulations”. ICASA’s letter to CellSAf says no such thing, and Cell C is well aware of that. It would appear to me that Cell C’s statement may be misleading the market, whether by negligence or by design, or that Cell C may be claiming some inside knowledge of ICASA’s internal workings and future rulings.” 

CellSAf is calling on ICASA to release the reasons for its decision and to follow due process with respect to all the issues raised in the CellSAf complaint as soon as possible.

Jose Dos Santos, Cell C CEO said on Wednesday that a recapitalised Cell C is good for the industry, the economy, and the consumer at large.

The mobile phone firm said the recapitalisation of Cell C has increased the ownership of the company by South African shareholders from 25% to over 86%.   

“The participation of historically disadvantaged persons in Cell C increased from around 25% to more than 30% at ownership level, with Cell C management and staff participating in the equity of the company for the first time,” said Cell C. 

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.

 CellSaf has been opposing the transaction from the date that it first became aware of it: December 10, 2015. 

CellSaf declared that the recapitalisation of the mobile phone operator amounts to a blatant attempt at corporate capture, and is likely to collapse under regulatory scrutiny.