Cell C shareholder said to be considering options

South African-based network operator Cell C is considering several takeover bids with major stakeholder Saudi Oger Telecom reportedly eager to cash-in on the interest.

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By  Ronan Shields Published  April 18, 2007

South African-based network operator Cell C is considering several takeover bids with major stakeholder Saudi Oger Telecom reportedly eager to cash-in on the interest. Speaking to the media, Cell C’s chief of corporate affairs Zeona Motshabi acknowledged that the company has received takeover offers at various intervals in the past. “Cell C receives offers from time-to-time, I understand that there has been interest but that is solely a shareholder issue,” she said. Cell C, South Africa’s smallest network operator with 3 million subscribers is owned 60% by Saudi Oger, 25% by local empowerment investors Cellsaf, and 15% by investment company Lanun Securities Holdings. The appointment of CEO Jeffrey Hedberg in May 2006 saw the company realign its market strategy to target the entry-level market with a low-end product offering in a bid garner a larger share of subscribers in the competitive South African cellular market. Cell C, which has been operational for six years and is yet to report a net profit, also reduced its staffing levels by 1% as part of a rationalisation process. "Let me be clear, however, management has a plan to reach profitability within the next two years," said Motshabi. Cell C recorded revenues of US$425 million translating to pre-tax earnings of US$28.2 million in the six months to June 2006. Later in the year the operator entered into an MVNO agreement with Virgin Group. Africa Analysis telecoms analyst Dobek Pater commented that cellular operators generally make profits after three to five years of operation in Africa and that he did not see Cell C growing beyond 10% of the market share despite having a subscriber base of 2.7 million as of last July. "A third cellular operator coming into a market has up to 24 months to gain market share. Thereafter, it is likely to remain with the market share it gains in the first two years of operations," said Pater.

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