In a surprise move, Cell C asked ICASA permission to transfer control of its Electronic Communications and spectrum licences to Blue Label’s The Prepaid Company.
The Independent Communications Authority of South Africa (ICASA) published this application in a government gazette on Wednesday, 6 December 2023.
ICASA said it had received applications from Cell C Limited to transfer control of the licences below.
- Individual Electronic Communications Service (I-ECS)
- Individual Electronic Communications Network Service (I-ECNS)
- Radio Frequency Spectrum (RFS) licences
The radio frequency spectrum (RFS) licences include licenses for its 2,100 MHz, 900 MHz, and 1,800 MHz spectrum.
Any mobile operator in South Africa needs these licenses to provide services to consumers and run its own network.
No reasons were given as to why Cell C would like to transfer these valuable assets to Blue Label’s The Prepaid Company.
One possible reason may be that Cell C’s main shareholder, Blue Label Telecoms, wants to protect these valuable assets should the mobile operator go bankrupt.
Cell C’s latest financial results revealed that the mobile operator remains hopelessly insolvent despite the recapitalisation in September 2022.
Cell C’s balance sheet for its full year 2022 shows that it has assets of R5.798 billion and liabilities of R15.092 billion. It translates into negative equity of R9.294 billion.
Simply put, it shows Cell C cannot honour its current liabilities, including its short-term borrowings, with its assets. This means Cell C is technically insolvent.
It is striking that Cell C’s liabilities are nearly three times higher than its assets. To turn this situation around will be exceedingly difficult.
However, there may be a less sinister reason. Cell C and Blue Label are expected to explain the transfer’s rationale.
ICASA said it would evaluate the transfer request for the I-ECS and I-ECNS licences using the criteria below.
- Promotion of competition in the ICT sector.
- Interests of consumers.
- Equity ownership by Historically Disadvantaged Persons.
The spectrum license transfer will be assessed under Regulation 15 sub-regulation 6 of the Radio Frequency Spectrum Regulations, 2015.