Blue Label Telecoms to acquire 3G Mobile for ZAR1.9 billion

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The board of directors of Blue Label is pleased to advise its shareholders that Blue Label and The Prepaid Company Proprietary Limited (TPC), a wholly owned subsidiary of Blue Label, has concluded an agreement with 3G Mobile Proprietary Limited (3G Mobile) and its shareholders, being Wild Rose Capital Proprietary Limited, Newshelf 1312 Proprietary Limited, Malewell Investments Proprietary Limited, Investec Bank Limited, Jonathan Beare and DBF Capital Partners Proprietary Limited (3G Vendors), in terms of which TPC will acquire 100% of 3G’s issued share capital for ZAR1.9 billion.

The shares in 3G Mobile will be acquired in two stages, with the initial acquisition by TPC of 47.37% of the issued share capital of 3G for a purchase consideration of ZAR900 million (Initial 3G Purchase Consideration) (Initial Acquisition) being subject to the conditions precedent set out in paragraph 5.1 below.

The acquisition of the remaining 52.63% of the issued share capital of 3G Mobile for a purchase consideration of R1.0 billion (Subsequent 3G Purchase Consideration) (Subsequent Acquisition) is subject to the conditions precedent set out in paragraph 5.2 below.

Nature of the business and rationale

3G Mobile is one of Africa’s largest distributors, and financiers, of mobile devices and handsets to major retailers and cellular network providers. It operates in 8 African countries, with offices in South Africa, Namibia, Botswana, Mauritius and distribution channels into Zambia, Zimbabwe, Swaziland and Lesotho. It has distribution rights for all major tier one and tier two mobile device and handset manufacturers, including, inter alia, Apple, Samsung, Huawei, HiSense, ZTE and Nokia.

Through its wholly-owned subsidiary, Comm Equipment Company Proprietary Limited (CEC), it provides the financing of the mobile handset component of post-paid contracts to cellular network providers such as Cell C Proprietary Limited (Cell C). At present, the CEC finance book is approximately ZAR3.0 billion.

3G Mobile shall be utilised as Blue Label’s expansion platform into the financing and supply of mobile devices, handsets and allied products. Both of these functions supplement Blue Label’s strategic objectives to provide value added services to both Cell C and its own customer base.

3G Mobile provides the ideal platform to consolidate Blue Label’s low cost and certified pre-owned mobile handset divisions into a consolidated group. The resultant acquisition is both earnings accretive and provides a solid foundation for distribution into the burgeoning low cost smartphone market.

 Salient terms of the acquisition

 The Initial 3G Purchase Consideration will be settled as set out below:

 About ZAR250 million will be settled by the issue of Blue Label shares (3G Acquisition Issue) to the 3G Vendors following the fulfilment of the conditions precedent applicable to the Initial 3G Purchase Consideration and ZARR650 million in cash, on a deferred basis.

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About Author

Thabo Mphahlele is the BizNis Africa Head of Sales and Marketing. Mphahlele was previously MultiChoice Production Support Analyst responsible for developing and monitoring applications. In addition, Mphahlele develops and automates batch scripts and is responsible for the daily infrastructure maintenance at MultiChoice. As a Production Support Analyst, he is responsible for incident analysis solving , developing and constructing business reports for SQL and Oracle and implement change controls for the business. Additional responsibility includes monitoring system performance via SOA, Kibaba (Elasticsearch), H.P BSM, HP Sitescope. Mphahlele is responsible for creating infrastructure performance reports through HP Ops Analytics, monitoring payments via Splunk and in-house built-in tool and disaster recovery simulation and testing. At Nashua Mobile, he was responsible for application development and enhancing the web sites At South West Gauteng College, he was the IT Technician and Network Administrator. During his tenure at Double Digit Media, he was he focused on application and web site development for new and existing clients Mphahlele contributes as a Content Manager for BizNis Africa.

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