Cell C Plans to Double Spending in Wake of Blue Label Deal

Updated on
  • South African mobile carrier acquires IConnect and Greencom
  • Cell C talking to financial institutions to form partnerships

Cell C Pty Ltd. plans to more than double spending on its network this year as South Africa’s third-largest mobile-phone company embarks on an acquisition spree that’s already taken in local fiber providers IConnect and Greencom.

Capital expenditure will increase to 3 billion rand ($256 million) from 1.2 billion rand in 2017, when the carrier put expansion on hold while completing a protracted recapitalization, Chief Executive Officer Jose Dos Santos said at a results presentation in Johannesburg Tuesday. Cell C’s now in the process of making “several” acquisitions in the fiber market and is also looking for deals in financial services, he said.

Read More: Cell C Seeks Acquisitions to Add Services After Cutting Debt

The recapitalization by fellow Johannesburg operator Blue Label Telecoms Ltd. helped Cell C reduce its debt by more than 70 percent, enabling it to better compete with larger rivals Vodacom Group Ltd. and MTN Group Ltd. That deal, which saw Blue Label take a 45 percent stake, took almost two years to complete due to regulatory scrutiny and threats of legal action by a minority shareholder.

“The recapitalization deal afforded us a 15 billion-rand turnaround,” from having a negative value under the debt burden, Dos Santos said. Earnings before interest, taxes, depreciation and amortization soared by 151 percent in 2017 to 7.8 billion rand, while sales rose 7 percent.

(Updates with acquisition names from first paragraph.)
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