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The Role and Impact of Blue Label Telecoms' Special Purpose Vehicles in Rescue of Cell C

Published September 21, 2023
9 months ago

In an attempt to streamline and clarify the complex scenarios surrounding Cell C's multiple recapitalisation efforts, today we delve deeper into the role and impact of Blue Label Telecoms' five Special Purpose Vehicles, SPV1 to SPV5.



In 2017, Blue Label Telecoms acquired a 45% stake in ailing mobile operator, Cell C, for R5.5 billion. This acquisition was facilitated via three special purpose vehicles. However, despite this initial recapitalisation effort, Cell C's financial health continued to decline, prompting another round of recapitalisation, including two additional SPVs.


One of the critical aspects of the recapitalisation included a R1.46 billion loan from Blue Label to Cell C, intended to assuage the growing debts with Cell C's lenders. Unfortunately, the lenders only managed to reclaim 20% of their loans.


Recent reports indicate that Cell C has executed a turnaround strategy intended to bolster operational efficiencies and slash operational costs, a move that Blue Label believes will amplify their shareholder value.


The recapitalisation processes established SPVs that assumed Cell C’s debts to various lenders, in exchange for ordinary shares in the company. Three SPVs were created in 2017 and two further SPVs distinctly materialised as part of the 2022 recapitalisation event.



Interestingly, the recent influx of SPVs has neither diluted any shares nor have directors been placed on their boards by Blue Label or The Prepaid Company, a Blue Label subsidiary.


It's also noteworthy that SPV5 took on Cell C's debt obligations to Dark Fibre Africa and received equity in return. Yet, Blue Label or TPC did not acquire any shares in SPV5 and have not positioned any directors on the SPV5 board. The shares in SPV5 are managed under the same structure as those in SPV4.


On the other hand, TPC bestowed SPV5 with a limited funding of R275 million to settle this claim. The chronicle of complex transactions and multiple SPVs illustrates a strategic effort to alleviate the mobile operator's pent-up debts and pave the way towards operational and financial recovery.


This article originally appeared in Daily Investor and is republished here with full consent. It offers a detailed perspective on how each SPV has played a pivotal part in Cell C's restructuring and revitalisation journey, offering a measure of hope to shareholders, employees and customers alike.


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