New era dawns at Blue Label
Blue Label has taken an immense step forward in its growth strategy by transforming its business model into a vertically integrated telecoms group. Last week, shareholders gave approval to buy a 45% stake in mobile network operator Cell C for R5.5 billion.
As a result of the recapitalisation plan, Cell C’s net borrowings will be reduced below R6 billion. With a cleaner balance sheet, Cell C will be in a stronger position to compete across its many consumer fronts.
Brett Levy, joint CEO of Blue Label, says: “This transaction is the most significant in Blue Label’s history and marks a milestone for the Group’s strategy. As a supplier and distributor to Cell C, we have already identified multiple-synergies in the procurement chain, distribution network and provisioning of products and services.
“Along with Cell C’s quality management team, and its attractively valued and powerful assets, a recapitalised Cell C offers our shareholders compelling growth prospects, including the possibility of a separate stock exchange listing in future.”
Says joint CEO Mark Levy: “We are delighted to conclude this complex transaction and take this opportunity to formally welcome Cell C to the Blue Label family. Both management teams can look forward to working closely together in unlocking commercial synergies, as well as identifying opportunities to enhance operational and financial performances. We thank the vendors and the many other stakeholders involved in bringing the transaction to fruition.”
Blue Label’s commercial contracts with all other mobile networks remain unchanged.
With the acquisition of the Cell C stake, Blue Label is positioned deeper into the telecom value chain, further protecting itself from possible disintermediation, whilst entrenching itself in its ever expanding customer base, exceeding 150,000 points of presence in South Africa alone. In addition, a rejuvenated Cell C will now be able to play a stronger role in the vibrant telco sector of South Africa, whist the national imperative of saving and creating additional jobs will be supported.
Blue Label also advised that its initial acquisition of 47.37% in 3G Mobile has become effective. Blue Label shareholders recently granted approval to acquire 3G Mobile for R1.9 billion. 3G Mobile, through its wholly owned subsidiary, CEC, provides financing for the mobile handset element of post-paid contracts, as well as distributing high-end branded mobile handsets.
Brett Levy says: “The acquisition of 3G Mobile is earnings accretive from the get-go. 3G Mobile will provide a solid foundation for handset and tablet distribution in complementing our existing range of mobile products and services, now all housed under one roof, serving South Africa and beyond.”