Cell C’s Saudi parent hires Goldman Sachs, close to throwing in the towel

cell c

At a memorable meeting at the Westcliff Hotel back in 2001, an ebullient local director and BEE partner Zwelakhe Mankazana went to lengths explaining how South Africa’s third cell phone operator would become the dominant player. It had a Saudi parent with deep pockets, great Government connections and some very smart plans, he emphasised. At the time, MTN had its hands full trying to get establishing in Nigeria and with its Telkom legacy, the other incumbent Vodacom also seemed vulnerable. Five CEOs and hundreds of millions of dollars later, Cell C’s owners appear to have now run out of patience. Appointing Goldman Sachs to “explore options” is easily interpreted as a euphemism for “get us the hell out of there…” – AH 
By Chris Spillane and Dinesh Nair

(Bloomberg) — Cell C Pty Ltd. is exploring options for the third-largest South African wireless carrier including a possible sale to domestic competitors, according to two people familiar with the matter.

Cell C, which is majority owned by Dubai-based Oger Telecom Ltd., is working with Goldman Sachs Group Inc. on the review, said the people, who asked not to be identified because the talks are private.

The wireless provider had about 20 million customers as of last month, according to the company. Market leader Vodacom Group Ltd. reported more than 31 million active customers in South Africa as of the end of last year.

Cell C’s survival is at risk as the company’s two larger competitors, Vodacom and MTN Group Ltd., seek transactions to strengthen their dominance in Africa’s second-biggest economy, Cell C Chief Executive Officer Jose Dos Santos told lawmakers in November. Cell C reduced staff last year after South Africa’s communications regulator scaled back plans to reduce the cost of calling other mobile networks, a proposal aimed at helping smaller carriers.

Oger Telecom is the telecommunications unit of Saudi Oger Ltd., which is the majority owner of Turk Telekomunikasyon AS.

The company is fully committed to Cell C and its growth plans, and has invested $450 million in the business in the last two years, it said in an e-mailed statement today. A spokesman for Goldman Sachs declined to comment.

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