Cell C takeover offers

ADSL South Africa (Broadband South Africa), 24 April 2007

Cell C confirmed that the company received several takeover offers. It seems that it’s now just a matter of time before a new majority shareholder takes over from Saudi Oger.
 
While specifics on the offers received remains sketchy at best, it’s sufficient to say that there’s clearly a lot of interest in Cell C, despite many analysts’ pessimistic outlook on the company’s chances of reaching profitability.
 
‘Last week, Cell C's chief of corporate affairs, Zeona Motshabi, confirmed that shareholders had received several takeover offers but would not comment further, as "it is solely a shareholder issue"’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007).
 
In other words, it’s a private matter.
 
How’s Saudi Oger feeling about a possible takeover?
 
It seems that Saudi Oger, Cell C’s majority shareholder, is not worried about a possible takeover but would in fact welcome one since the company doesn’t see Cell C as one of its core businesses.
 
Saudi Oger ‘…would rather be left with its best performing operation, Turkish-based fixed-line operator Turk Telekom, according to one London-based fund manager’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007).
 
In other words, Saudi Oger clearly doesn’t have a lot of love left for Cell C.
 
What may be the reasons for Saudi Oger’s lost of love for Cell C?
 
Well, one can think of more than one reason:

• Departure of former CEO – Whether Cell C’s former CEO, Talaat Laham, was forced out or not; it definitely didn’t sit well with Saudi Oger who sponsored him. Talaat joined Saudi Oger in 1984 and was appointed as CEO of Cell C in February 2000. 

• Non-core business – ‘Saudi Oger, a diversified company, started off as a construction group in 1978. It has operations in real estate development, operation and maintenance, and technology services’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007)
   
  In other words, one can see why Cell C doesn’t form part of Saudi Oger’s core businesses. 

• Turk Telkom – Saudi Oger’s ‘…telecommunications operations are a 60 percent shareholding in Cell C and a 55 percent stake in Turk Telekom’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007). Also, ‘…Turk Telekom has more than 18.5 million fixed subscribers and 2 million high-speed internet subscribers. It ranks among the 15 largest fixed-line operators in the world. Cell C had 2.7 million subscribers and revenues of R3 billion but is yet to make a net profit’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007)
   
  ‘According to the analyst, Saudi Oger will need to pump in more money to help Cell C survive. This will be on top of the R300 million invested by Saudi Oger in Cell C last year’ (Takeover bid may be welcome call for Cell C’s majority investor, Wray, Business Report, 23 April 2007).
   
  In other words, Turk Telkom is clearly the stronger horse in Saudi Oger’s telecoms stable. 

• Etc. 

ADSL South Africa (Broadband South Africa) believes Cell C will become profitability on the end of the day and that a new shareholder is going to takeover from Saudi Oger before that happens.