Johannesburg – 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.
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 the 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 an associate 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, not a subsidiary.
The question remains: How much control does Blue Label really have, and will it push for full control in the future?
*This article first appeared in our sister publication techfinancials.co.za
