Cell One sale sets BEE abuzz

THE 100 per cent sale of Cell One to Egyptian company Telecel Globe seems to have caught Namibians by surprise, with members of the public wondering about the loss of a Namibian stake in the company.

The BEE components all sold their shares to the Egyptians.
Powercom (Pty) Ltd, under the trading name of Cell One, previously held 61 per cent Namibian ownership.
This consisted of a 37 per cent stake by NamPower, 12 per cent by Zeven Investment, a 10 per cent stake by the Old Mutual Group Namibia, and a 2 per cent shareholding by the Powercom Educational Trust – a trust created by the shareholders.
The remaining 39 per cent was owned by the Norwegian company, Telecommunication Management Partner.
The question on everyone’s minds, though, is why a total sell-out of shares?
In response to a query on this, Gerson Narib, Chairperson of Cell One’s former board of directors, simply said: ‘That’s the offer we got.’ He said he was not at liberty to provide information regarding whether or not the board had tried to negotiate for a Namibian stake in the sale of the company, and directed these and further questions to Cell One.
No information could be obtained as to whether former shareholders would get preference as the company’s new BEE partners, once the transaction process is initiated.
Kai Uebach, Chief Executive Officer of Telecel Globe, says the reason his company decided to opt for a full purchase of the company, as opposed to retaining Powercom as the BEE component, was to have a free hand in restructuring the company.
However, the acquisition comes with a provision to engage a BEE component.
‘We have an obligation to negotiate with BEE partners to distribute a share of the company, but this obligation is on equal terms, which means we paid a certain price for the business. We are business, not political people, so engaging a partner will be a transparent process that supports the objectives of the company.’
Asked what share of the company would be redistributed in this regard, Uebach responded that ‘the share depends on the partners. There is no real (BEE) law governing this, so we will see where we end up. We would look to engage a good, reputable company though, that shares in our vision.’
Uebach also disclosed to The Namibian that BEE companies have already started approaching Cell One over a share in the mobile telecommunication company.
The previous shareholders sold the company for approximately N$580 million, of which around N$320 million has already been paid by Telecel Globe, with the balance due in January next year.
According to Tiaan Bazuin, Cell One’s lawyer, the price tag at which Telecel Globe bought the company constitutes the sale price. That is, all debts remain with Cell One.
Given the previous shareholding breakdown explained above, this essentially means that each shareholder retains their respective proportions in the company.
However, those reached for comment would not disclose the return on their investments – the profit (or loss) that they made above the amounts they invested into Cell One.
Zeven Investments, the empowerment company wholly owned by Namibia Mineworkers Investment Holdings Company (Nam-Mic) and established solely for the 12 per cent stake in Cell One, says the decision to sell its shares was a collective business decision made by all the shareholders.
The company’s sale of its 12 per cent shares amounts to close to N$70 million.
Asked whether the company would consider buying into the new Cell One, Nam-Mic CEO Joshua Kaitungwa said: ‘We still have to make up our minds. The transaction was just completed and we haven’t yet made a decision on the way forward.’
Another interesting component of the previous shareholding structure was the two per cent stake held by the Powercom Educational Trust, which amounts to around N$11,6 million of the sale price. The trust was set up by the former shareholders of Cell One.
Johann Malan of NamPower said the future of the Trust is ‘still to be decided upon’, and declined to disclose information on the trustees, beneficiaries and current status of the trust.
He said what would happen with the trust ‘depends on what the new owners want’, but this contradicts the nature of the sale of Cell One which comprised the full 100 per cent of the company, and therefore, a two per cent payout to the Trust.