Black investors cut stake in S.Africa's Cell C

JOHANNESBURG (Reuters) - Black shareholders in South Africa's third-ranked cell phone operator, Cell C, have sold part of their stake to Saudi investors for $140 million and will use the proceeds to help repay debt, Cell C said on Wednesday.

Unlisted Cell C said black empowerment group CellSAf held 25 percent of the company after the sale and that Panama-based Lanun Securities -- owned by Saudi firm Al Rashid Engineering -- held 15 percent.

Saudi conglomerate Oger Telecoms holds the other 60 percent.

CellSAf, which has first refusal if Lanun decides to sell, said it had cut its holding to pay for the remaining 25 percent outright and clear heavy debts.

"We are now entirely debt free," CellSAf Director Zwelakhe Mankazana told Reuters. "This is one of the first transactions where a black company created specifically to start a venture has done so without relying on the largesse of local banks."

The deal came after communications regulator ICASA agreed to tweak Cell C's licence conditions, which had stipulated the firm must be 40 percent owned by black investors.

South Africa is pressuring companies to bring black investors on board to redress imbalances in the mostly white-controlled economy 11 years after the end of apartheid.

CellSAf dismissed criticism that Cell C had opted for foreign investors over black South Africans, arguing the deal allowed it to get its finances in order while representing a vote of confidence in South Africa, which is trying to attract foreign direct investment to spur growth.

Cell C, which lags Vodacom and MTN in the fight for market share, has said it may float after 2006 to raise funds for expansion abroad.

The company is also in talks with British entrepreneur Richard Branson's Virgin to set up a 50-50 joint venture to market Cell C services in South Africa under the world-famous UK brand.

Source: Reuters