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Net1 UEPS acquires stake in Blue Label Telecoms

Net 1 UEPSTechnologies Inc. has agreed to subscribe for about117.9 million shares in Blue Label Telecoms Ltd., at a subscription price of16.96 South African rand per share.

The subscription price represents a 10% discount to 18.84rand, being the 30-day volume weighted average price of a Blue Label sharetraded on the Johannesburg Stock Exchange to Sept. 29.

The aggregate subscription consideration payable by Net1 is2.0 billion rand ($144.0 million). Following implementation of thesubscription, Net1 will own about 15% of the issued ordinary shares in BlueLabel. The company will pay the consideration using a combination of cash, debtand an equity issuance of 5 million shares of common stock, at an issue priceof $9.00 per share. The implementation of the subscription is subject to thefinalization of the financing package and the approval of Blue Labelshareholders. Net1 will be entitled to nominate a director to Blue Label'sboard.

Blue Label is a virtual and physical distributor ofsecure electronic tokens of value as well as a provider oftransactional and value added services. The company operates inSouth Africa, Mexico and India.

Blue Label also intends to acquire a 45% interest in Cell C,a mobile network operator in South Africa. For the fiscal year ended May 31,Blue Label reported revenue of 26.2 billion rand, EBITDA of 1.24 billion randand EPS of 1.04 rand.

Serge Belamant, chairman and CEO of Net1, said in anews release that that the coalition will provide customers with an offeringthat includes banking, transacting, debit and credit cards,microfinance, insurance, distribution of airtime and electricity, web services,voice and data, and access to low-cost handsets.

In India, Net1 and Blue Label are shareholders in MobiKwikand Oxigen respectively, and the companies believe there are opportunities toextend their collaboration through the provision of payment solutions.

As of Oct. 4,US$1 was equivalent to 13.67 South African rand.