Cell C sells stake in Virgin Mobile South Africa; new investor pledges substantial investment
South African mobile operator Cell C has sold its 50% stake in Virgin Mobile South Africa for an undisclosed sum, the Virgin Group has confirmed. The deal will see co-owner Virgin Mobile raise its stake in the business to 55%, whilst Bahamas-based Calico Investments will acquire the remaining 45%. The transaction is subject to certain conditions, including approvals from the Competition Commission; it is expected to be finalised by April 2011. Cell C will continue to function as Virgin Mobile’s network partner, under an updated network services agreement. In August 2010 it was reported that Virgin Mobile was planning to launch its own mobile broadband service using Cell C’s new HSPA+ network.
Steve Bailey, CEO of Virgin Mobile, commented: ‘Virgin Mobile has shown consistent high subscriber growth and has significantly increased its base of higher ARPU post-paid subscribers in South Africa over the last two years. It is time for us to capitalise on this growth and bring in an additional shareholder to invest in Virgin Mobile’s further expansion, which will enable us to deliver more exciting products and services to our valued customers. We also look forward to leveraging our updated network agreement with Cell C to provide improved performance to our customers’.
Faisal Al Bannai, a director of Calico Investments, added: ‘Calico looks forward to working with Virgin Mobile to develop the business through the expansion of its offerings. Virgin Mobile has shown an ability to differentiate itself from the competition and, with our intended investment, there will now be even more potential to increase the range of quality products and services Virgin Mobile can offer going forward’. Virgin Mobile South Africa began life in 2006, as an equal joint venture between Cell C and Richard Branson’s Virgin Group. When the possibility of a stake sale was first mooted in July 2010 Virgin claimed to have 300,000 customers, of whom 90% were post-paid.