Fears Rise Cell C Bonus-Hungry Bosses Could Milk Millions From 2020 IPO Plan

Cell C has kick-started the process for an IPO, but it hasn't informed the market.


Cell C Executives – who have already received a massive windfall in success bonuses – are going ahead with initial public offering (IPO) plans billed for either next year or 2020.

This is despite the fact that Cell C’s floating on the JSE is dependent on market conditions improving.

The move has raised suspicions it may be a ploy by the company’s bosses to earn millions more.

In 2017 financial year, Cell C’s executive directors, who served as prescribed officers, were paid R219 million four times more than the R50.9 million they were paid in 2016. For more read: R219 Million Paid To Three Top Execs At Cell C In 2017

When asked, Cell C told TechFinancials – two months ago – that the mobile phone operator is still considering listing, subject to market conditions.

Since then there was no evidence that Cell C’s balance sheet was improving as would be expected of a company preparing to be floated.

Instead the company is saddled with high levels of debt. Its total liabilities increased by 5% to R19 billion in June 2018.

On a positive note, Cell C’s long-term debt has been reduced to R6.4 billion from R17.9 billion. However, short-term debt has more than doubled to R1.5 billion versus R417 million.

More worrying is the obvious lack of transparency in the company’s dealings on these matters resulting in speculation the floating could be driven by greed for success bonuses and not necessarily by interests of shareholders.

Last month, business magazine Financial Mail (SA) stated: “As a company 60% owned by JSE listed companies, you’d think Cell C could be a bit more transparent.

“For a company talking boldly about listing on the JSE either next year on in 2020, its shoddy level of transparency suggests it’s nowhere near ready.” For more read: ROB ROSE: The nerve of Cell C executives

On a positive note, Blue Label Telecoms has published on its website Cell C’s Condensed Group Interim Financial Statements for the period ended 30 June 2018. While these have been available for some time on the London Stock Exchange, neither these or the 2017 Annual Financial Statements have been published on Cell C’s website.

The non-disclosure policy of Cell C continues.

The mobile phone company, which is majority owned by JSE-listed Blue Label Telecoms, appears to be keeping potential investors and current shareholders in the dark.

Cell C has kick-started the process for an IPO, but it hasn’t informed the market.

TechFinancials has learnt that Robert Pasley, Cell C’s chief strategy officer, recently announced the appointment of Doug Mattheus as part of the preparation for the planned IPO.

“In preparation of the planned listing of Cell C, I have asked Doug Mattheus to join the Strategy Group to assist in various projects, including advising on building and messaging the Cell C story to the broader market,” said Pasley in an internal message to the leadership team.

The chief strategy officer said Mattheus served Cell C for six years as Executive Head: Marketing and will be able to bring his extensive experience to bear on a number of strategic projects.

“I would like to welcome him to the team and wish him every success in this new endeavour,” said Pasley.

A Cell C  spokeswomen did not respond to a request for comment.

Mattheus, is one of the beneficiaries of the massive bonus pay out to executives that have irked staff, who have been told the company cannot afford to pay them bonuses this year because targets were not met. For more read: Workers Call For Probe Into Multi-Million Rand Payments Made To Cell C Executives

Other bosses who were handsomely rewarded include current Cell C CEO Jose Dos Santos, Pasley and Daniel Dana Bakker – chief technical officer since 2013. For more read: Cell C’s Top Six Decide Their Own Hefty Remuneration.

In November 2017, these executives reportedly shared R75 million as part of the so-called “lncentive Scheme 1″ in Cell C. For more read: Cell C’s Top Six Decide Their Own Hefty Remuneration.

Cell C Campus
Cell C Campus (Photo Credit: Atterbury Properties)

Pasley, Dos Santos and other executives stand a good chance to earn more money if Cell C is listed on the JSE.

Dos Santos owns 1.875% of shares in Cell C and Pasley 1.25%.

London Stock Exchange filings indicated that Cell C’s listing is billed for 1 July 2019.

The company has established a share option scheme that entitled staff and key management to participate in the equity of the company’s recapitalisation transaction.

The scheme provided participants with 10% of Cell C’s shares for consideration.

Key management was given 5% of the issued shares at nominal value as part of the recapitalisation.

“Specific key management participate in the retention plan with vesting at the earlier of 30 days after Cell C’s listing date or 1 July 2019,” reads the operators filing.

“Therefore, vesting occurs six months after the post listing date or payment date until 1 January 2023.”

For now, the spotlight remains on the massive bonuses paid to bosses and the preparations of the possible listing with the accompanying windfall for the same monied characters.

Mattheus job will be cut out for him if he believes that you can keep the markets in the dark about a company’s financial affairs, and simultaneously selling Cell C to the markets.- lourie@techfinancials.co.za


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