Regulatory authorities are to hold a public hearing into an application by Cell C to reduce its empowerment shareholding.
CellSaf, the empowerment consortium that owns 40 % of the country’s smallest cellphone network operator, wants to sell a tranche of shares amounting to 15% of Cell C to Lanun, a Saudi investment firm, for about $180 million.
This move, CellSaf says, would eliminate its debt and reduce the burden of financing network expansion.
But it will require a change in licence conditions that stipulate a minimum empowerment level of 40 %.
After a seven-day notice period, which was due to start on Thursday, the Independent Communications Authority of South Africa will hold a one-day public hearing into the issue. The process was being expedited, Icasa said in a statement, because of factors “specific to the application”.
The Icasa council will then have to consider whether a 25% black shareholding, unencumbered by debt, is more desirable than 40% heavily encumbered, and whether changes to the licence conditions will hurt the credibility of the regulator.
Cell C is privately held, and little information on its financial situation is available, but industry analysts point out that CellSaf may be compelled to reveal some hitherto guarded figures if it wants to make a case that it can no longer afford to fund its debt.
Vodacom, which has only an indirect empowerment shareholding, declined to comment on whether it would make representations at the hearing. MTN, which has seen its empowerment levels trimmed to 6,7 % by a similarly debt-reducing share sale, did not return calls from the Mail & Guardian.