South Africa’s third-biggest telecom operator, Cell C, plans to hive off assets into a new special purpose vehicle (SPV), the country’s competition watchdog said on Thursday, as part of a plan to restructure the company’s debt.
Gatsby SPV has been set up for the purpose of the proposed transaction, the Competition Commission said in a statement. It did not give details about the deal or indicate which assets of Cell C may be sold to Gatsby.
The Commission said Gatsby SPV will be controlled by a trust that is yet to be formed.
As that may raise competition concerns, the Commission said it recommends that Gatsby SPV and/or the trust will not be owned or controlled by companies that compete or may compete with Cell C or firms that have a customer-supplier relationship with Cell C.
Cell C said it was pleased that the Commission has given it conditional approval for the proposed recapitalisation deal, but said it remains cautiously optimistic until the deal has been fully concluded. It did not give details on which assets may be transferred.
“A recapitalisation is an important pillar of Cell C’s turnaround strategy. We are being diligent and thorough to ensure it is a transaction that meets all conditions and continue to engage with all stakeholders,” Cell C’s chief executive Douglas Stevenson said in an emailed response to Reuters queries.
The firm announced a turnaround plan last year aimed at boosting its balance sheet by securing new capital, cutting costs and minimising operating expenses where possible.
Earlier this year Cell C defaulted on a series of debt payments having underperformed in a highly competitive market dominated by MTN and Vodacom.