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Cell C defaults on interest repayments on R2.7bn loan

Blue Label shares sink.

Cell C has defaulted on the payment of interest on a US$184-million loan, which was due in December 2019, along with interest and capital repayments related to bilateral loan facilities with Nedbank, China Development Bank, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China.

This is according to the financially distressed mobile operator’s largest shareholder, Blue Label Telecoms, which said in a statement to shareholders on Tuesday that the Nedbank, China Development Bank, DBSA and ICBC payments were due this month.

“Currently, none of the bilateral loan facilities have been accelerated as note holders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” Blue Label said.

Blue Label shares were trading down 6% at R2.99 apiece shortly after midday in Johannesburg.

A Cell C spokeswoman told TechCentral that the company is in “active discussions with lenders and shareholders” regarding a planned recapitalisation. Potential lenders include businessman Jonathan Beare’s Buffet Consortium.

”Our turnaround strategy is to ensure operational efficiencies, restructure the balance sheet, implement a revised network strategy and improve overall liquidity. We continue to engage with all stakeholders throughout this process and believe we have made good progress,” said Cell C CEO Douglas Craigie Stevenson in a statement.  — (c) 2020 NewsCentral Media

Duncan McLeod is Editor of TechCentral

This article was first published on TechCentral here and republished with permission.

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Am I wrong, or are a lot of dominoes starting to fall over..

Telkom was there to take the burden but you said no

no chance of a buyer from outside. ICASA need to stop worrying about data prices and start leveling the playing field.

Indeed, ICASA and competition authorities should not focus so much on forcing the two big players, VC and MTN to lower data rates, but rather on ensuring fair competition.
We also would be better off with more consumerism, better consumer awareness.
ICASA horribly failed when they allowed the colluding duopoly to raise the MTRs, the mobile termination rates, also called the interconnection fees, 5 fold in 2001, just after CC had obtained a operating license. This gave CC a very difficult, almost impossible first 10 years, from 2001 till 2011, till ICASA started to lower MTRs. They accrued massive debts, while VC and MTN accumulated enormous net profits. CC also made some dubious decisions of their own to add to their misery.
Cell C Honchos awarded themselves with more than R 200 m bonuses and R 300 M “Success” fees a few years back after they concluded, the deal with Blue Label Telecoms. This while CC still had large debts. This money could have been better spent on their network. They threw in the towel long time ago with not investing enough in their network.
Only a large international entity like Orange, already present in many African countries, like Botswana will be able to save CC. Otherwise I can only see them slowly slide down, being a glorified MVNO, mobile virtual network operator, with a big head office and retail outlets in prime retail space. By ever more relying on MTN’s network, in their extended roaming agreement, they will not survive, I sincerely fear.
A Telkom tie up would have been difficult, very different culture, it seems to me, but not impossible. Telkom customer care and billing remains disastrous.

Now Telkom must buy for cheap!

Whats the problem?

Become a SOE and receive a State Bailout with tax payers money.

Imagine the NHI in a few years time? When listed companies start battling and retrenching tax payers, when the States revenue declines due to this, the Circus will be in full play and everyone will suffer, except of course the thieving Elite and Civil KFC eating civil servants

Of course they haven’t factored this in as they think they have the solution to all challenges. What they don’t tell the masses (their voters) is that they (Government) created all the problems

The solution lies with business more-so small business. But alas, they’ve killed the Goose that lays the golden egg

To think they said no to Telkom – they should have sold that poisoned chalice and walked away

Let it fold…
Too many mobile businesses for the size of the SA market.

Pity, we could save them R 100’s of millions, but they chose to do nothing….now they have to foot the bill…

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