JSE-listed Blue Label Telecoms has increased its stake in Cell C to 53.57% through its subsidiary, The Prepaid Company (TPC), raising fresh questions about whether the struggling mobile operator is now a subsidiary or remains an associate company.
On January 24, 2025, Blue Label announced that ICASA had approved the transfer of Cell C’s spectrum and network licenses, clearing the way for the company to assume more control. TPC acquired an additional 4.04% of Cell C shares from Cedar Cellular Investment 1 (SPV1).
However, despite the increased shareholding, Blue Label maintains it does not have de facto control of Cell C. The company holds 49.53% of shareholder voting rights and can appoint four out of 12 board members, where each director has one vote.
“It has been determined that the Cell C Board makes the decisions about the activities that significantly affect the returns of Cell C (the relevant activities),” Blue Label stated in its latest results booklet.
Blue Label’s influence over Cell C is further complicated by special purpose vehicles (SPVs) created during Cell C’s recapitalisation between 2017 and 2022. These SPVs absorbed debt in exchange for shares, making governance murky.
One such entity, SPV4, is owned by Albanta Trading, a subsidiary of The Believe Trust, set up for Cell C employees. Albanta’s active directors include Cell C executives Joseph Juba, Angelo Mashaba, and Lehlomo Joshua Moela, while Brett Copans and Rachael Ayo-Oladejo serve as directors of both SPV4 and SPV5.
Then there’s M5, an enigma in the equation—it’s not registered with the Companies & Intellectual Property Commission (CIPC), leaving questions about its leadership and purpose. Are these structures genuine empowerment vehicles, or are they fronts masking a lack of real transformation?
Blue Label has clarified that TPC can acquire an additional 13.66% in Cell C from the SPVs in settlement of outstanding loans.
However, any further acquisition would require Competition Commission and ICASA approval, making the process uncertain.
“Should TPC wish to obtain any of these additional shares, the group’s external legal advisors have advised that it can only do so lawfully with the prior approvals of the Competition Commission and ICASA,” Blue Label explained.
“Furthermore, the granting of the regulatory approvals is not a formality or within TPC’s control, hence TPC does not, on its own, have the practical ability to obtain any additional shares (and voting rights).”
Is Cell C associate company or subsidiary of TPC
Blue Label further stressed that while TPC bears the economic risks and rewards of the 13.66% stake, it does not control how the voting rights attached to these shares are exercised. Instead, the voting rights lie with SPV1 and SPV4, whose decisions are made by directors appointed by Albanta.
Additionally, Gramercy and Nedbank now hold 6.09% and 7.53% of Cell C, respectively, further complicating governance dynamics. Changes to Cell C’s Memorandum of Incorporation (MOI) require at least 82% shareholder approval, which TPC alone cannot achieve.
“Even if TPC had de facto control at a shareholder level, it could not, on its own, change the MOI to enable it to appoint the majority of the Directors,” Blue Label confirmed.
For now, despite the increased stake, Blue Label continues to account for Cell C as an associate company, not a subsidiary.
The question remains: How much control does Blue Label really have, and will it push for full control in the future?
To thrive, Cell C must operate under clear and honest ownership structures, says the writer. Picture: THAPELO MOREBUDI
Is the Independent Communications Authority of South Africa (Icasa) capable of untangling the complex BEE structure established by Cell C to discover the true ownership of the company and its subsidiaries?
I remain unconvinced.
On September 26, 2023, Cell C applied to Icasa to transfer control of its licences, including its radio frequency spectrum, to The Prepaid Company (TPC). TPC, a subsidiary of JSE-listed Blue Label Telecoms, currently holds a 49.53% stake in Cell C and seeks to increase this to 53.5%. This move, however, is fraught with controversy due to concerns over Cell C’s actual BEE credentials and speculation that MTN may be controlling its spectrum.
At a public hearing held this week by Icasa, issues regarding Cell C’s empowerment status were highlighted, with some questioning whether the company meets the requirement of at least 30% ownership by historically disadvantaged individuals.
Duncan Turner, SC, representing Vodacom, presented evidence suggesting that MTN might have assumed control over Cell C’s spectrum, which would necessitate amendments to the application. Turner argued that, without these changes, the application should either be rejected or suspended.
Cell C’s former BEE partner, CellSaf, has seen its direct stake plummet from 40% to just 1%.
Advocate Siyabonga Mahlangu, representing CellSaf, noted: “We didn’t even know until today that it has been reduced to 1%.”
He criticised Cell C’s approach, saying: “Actual empowerment appears to have been replaced with fancy, complicated, sophisticated BEE structures.” Mahlangu urged Icasa to thoroughly investigate the holding structure of Cell C, as CellSaf’s data suggests the company doesn’t meet the 30% black ownership threshold.
The Independent Communications Authority of SA (Icasa) has long been the watchdog of the country’s telecommunications, broadcasting and postal industries. However, Icasa’s mute stance on rulings it makes has led to concerned entities having to take it upon themselves to announce the outcomes of the regulator’s adjudication.
The regulator’s handling of the long-running Cell C licence transfer matter is a glaring example of how Icasa’s silence on its rulings risks making it irrelevant. Last week it emerged through the grapevine that Icasa had approved the transfer of Cell C’s spectrum and network licences to Blue Label Telecoms, a JSE-listed tech company. This would pave the way for Blue Label to take control of the struggling mobile operator, which has in effect been transforming into a super mobile virtual network operator.
With Icasa silent on the matter, Blue Label’s share price surged 13.51% in the past week and 7.88% year to date. The share price appreciation suggests the market had already caught wind of the approval before it was officially announced by Icasa. Blue Label has since issued a statement confirming the approval, and still Icasa remains conspicuously silent.
No public notice. No media statement. No explanation — just silence. This is not just puzzling, it’s deeply concerning, especially considering that the regulator held public hearings on the matter in September last year. Why keep schtum about its ruling on the Cell C licence transfer to Blue Label? What is the regulator hiding?
While Icasa has “informed” Blue Label about its decision to approve the licence transfer, it has selectively left other stakeholders in the dark. CellSaf, Cell C’s former BEE partner, the stake of which plunged from 40% to 1%, has not received any formal notice from Icasa. CellSaf company secretary Nomonde Mabuya expressed bewilderment at the situation, noting that Blue Label had already issued a JSE Sens announcement while CellSaf remained in the dark.
“What is even more strange is that Icasa held public hearings on this matter in September last year, and yet its findings are not public,” Mabuya said.
