By Pinky Khoabane
Cell C’s BEE shareholder, CellSaf, ‘will not sit idly’ and allow its stake to be watered-down by a self-serving deal that will not only see the management of the mobile operator get 10% stake in the business for a nominal fee of R2000 but also see Blue Label Telecom acquire 45% of the company.
Cell C is owned by 3C Telecommunications, which is 75% owned by Oger Telecoms and 25% by CellSaf.
The transaction between Cell C and Blue Label is meant to go ahead tomorrow (28 February 2017) but the empowerment group has vowed to challenge it through “the courts, along with regulatory bodies including ICASA, the Competition Commission, the Department of Telecommunications, the CIPC and the JSE, among others,” it said in a statement released over the weekend.
If it goes ahead, the “Cellsaf stake will be reduced to 7.5% for which it will be expected to assume additional liabilities of almost R3bn. Among other aspects of the deal is the 10% stake that will go to the six white men who make up the management of the company.
Speaking on condition of anonymity, a CellSaf board member said the empowerment group had some years back, sold 15% of its initial 40% stake in 3C in order to remain debt free and yet was expected to assume a liability of R3bn. He described the transaction as “daylight robbery”.
Having used the black empowerment group to attain the mobile operator license at a nominal fee some 16 years ago, the Saudi-based Oger Telecoms has since adopted a hostile stance towards its empowerment partner. It is accused of violating several corporate governance principles which include reneging on the agreement which gave CellSaf the right to appoint a deputy chief executive officer (ceo) and deputy chief financial officer (CFO). The board member said they had not had a board meeting in six years but the majority partner had blocked many board resolutions and “had choses to run the company on their own”. In 2009, the Company’s Act compelled all companies to renew their Memorandum of Incorporation (MOI), both shareholders – CellSaf and Oger Telecoms – amended the MOI to include an 86% vote for major decisions.
The board member says CellSaf only recently discovered that the amended MOI was never lodged with the CIPC as required by law. He alleges that Oger Telecoms had waited for the stipulated date by which to lodge the revised MOI to lapse and reverted to the old MOI which gave it the right to make decisions with only a 75% vote.
With the depreciation of the rand, the debt “kept ballooning” and the majority shareholder borrowed money from the Mediterranean Bank, whose chairman, Mohammed Hariri also sits on the board of Saudi Oger Group which owns Oger Telecoms. “This was done without board approval and Hariri did not disclose that his bank was financing Oger Telecoms and that he would be benefiting directly,” the board member added. He said CellSaf wanted a full scale investigation into these loans as “they may turnout to be fictitious”.
Secret deal with Blue Label
It is also alleged that CellC has a secret deal with Blue Label by which if CellC was not able to pay the R2.5billion in airtime that it owes Blue Label, the latter could acquire a stake in CellC. This deal was not approved by the board according to the CellSaf board member who spoke to UnCensored.
“Cell C was granted its license 16 years ago because of our broadbased BEE shareholding and we are not going to stand by idly as a handful of rich business people rob millions of South Africans of their investment,” said CellSAf spokesperson Dr Nomonde Mabuya. “Why should CellSAf be sacrificed for Blue Label and Net 1, a company whose motives we are duty bound to question?”
The apartheid government issued mobile telephone licenses to Vodacom – owned by British Vodafone, Telkom and Johann Rupert – and MTN in 1993 and 1994, respectively. The government decided there was a need for a Black mobile operator and in 2002, ICASA issued a third mobile operator to CellC.
“The BEE investors that founded Cell C invested $100m in the company at the time, raised by all its shareholders, who comprise over 30 SMMEs from every province of the country and organisations like CONTRALESA, NATIONAL MOVEMENT OF RURAL WOMEN, SATACO, MKMVA and a host of women owned businesses and investment vehicles. We believed in this company right from the start and now we are meant to quietly hand it all over, in a deal that does nothing more than further enrich the super wealthy.” said Mabuya.