Cell C is technically insolvent and needs a crucial recapitalisation deal struck to recapitalise the company, which is taking place on June 20. Picture, Simphiwe Mbokazi ANA.
Cell C was the only remaining successful bidder among the six that bought various units of spectrum slots that has not fully serviced its part of the fees, Independent Communications Authority of South Africa (Icasa) chairperson Keabetswe Modimoeng told Parliament yesterday.
This as Cell C is technically insolvent and needs a crucial recapitalisation deal struck to recapitalise the company, which is taking place on June 20.
Briefing Parliament’s portfolio committee on communications on the recent auction, which raised R14.4 billion, Modimoeng said the regulator had issued radio frequency spectrum licences to successful bidders by May 10 after receiving a proportionate sum of the auction fees.
"One successful bidder has only serviced part of the auction fee. The Authority is taking advice on the matter," he said.
He told parliamentarians later that the said bidder was Cell C. “They have paid but there is a balance being finalised,” he said.
Zahir Williams, the chief legal officer at Cell C, said the matter was confidential between Icasa and Cell C.
“The awarding of high demand spectrum is essential to enable smaller operators like Cell C to remain competitive and to continue to innovate on product and services to meet customer demands in this digital era,” Williams said.
However, Cell C’s latest financial results show the company’s total liabilities of R21.4bn far exceed its total assets of R8.2bn.
Blue Label, Cell C’s biggest shareholder, notified shareholders in May: “The bond-holders will be required to legally indicate their consent to the offer – of 20c for every R1 of debt – by means of a vote. A majority of at least 75 percent of the vote in favour of the offer is necessary for it to be implemented.
“The listed bonds or notes ($184 002 000) is a portion of Cell C’s overall debt of R7.3bn owed to secured lenders.”
Cell C has called a meeting of debtors to vote on whether they will take an 80 percent haircut on their debt as part of a deal to recapitalise the mobile operator.
In Parliament, meanwhile, Modimoeng said Icasa would now press ahead with plans for licensing a wholesale open-access network (Woan).
He said the regulator intended to make a full business case for the Woan and was consulting with various international experts, including the Mexico regulator, which had experience with the technology.
Icasa published a timetable on October 1 for South Africa’s planned spectrum auction and a schedule for the “expedited licensing” on the Woan. Under that plan, Icasa should have published a consultative document related to the Woan licensing.
Modimoeng has said the Woan licensing process is aimed at introducing an additional credible player to promote competition in the ICT sector.
“The success of the spectrum taught us that where we want to be, we must arrive with all stakeholders on board. We are committed to Woan,” Modimoeng said.
Meanwhile, parliamentarians were told that the Universal Service and Access Fund (USAF), which is being shut down, carries over R400 million in potential legal liabilities, while it also reported the suspension of six senior executives for alleged financial misconduct.
Universal Service and Access Agency of South Africa (USAASA) acting chief executive Chwayita Madikizela said the body was haunted by lawsuits from its service providers, including Leratadima Marketing Solutions, which is in liquidation.
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