BLUE LABEL TELECOMS LIMITED - Cautionary Announcement

Cautionary Announcement

 Blue Label Telecoms Limited
 (Incorporated in the Republic of South Africa)
 (Registration number 2006/022679/06)
 Share code: BLU
 ISIN: ZAE000109088
 (“Blue Label” or “the Company”)

 CAUTIONARY ANNOUNCEMENT


Blue Label has submitted a conditional binding offer ("Offer") to the board of directors of Cell
C Proprietary Limited ("Cell C") in terms of which Blue Label has offered to participate, in
conjunction with other investors, in the recapitalisation of Cell C (the "Proposed Transaction").
Under the terms of the Offer, Blue Label will contribute R4.0 billion to Cell C by way of a
subscription for approximately 35% of Cell C's total issued share capital following the
conclusion of Cell C's recapitalisation programme.

Following the implementation of the Proposed Transaction, Cell C's net borrowings will be
reduced to a maximum of R8.0 billion. A meeting of the board of directors of Cell C is in the
process of being convened in order to consider the Offer.

The Proposed Transaction is subject to, inter alia,

-      the execution of definitive transaction agreements typical for a transaction of this
       nature;
-      the securing of funding by all parties to the Proposed Transaction;
-      Cell C's aggregate net borrowings being reduced to a maximum of R8.0 billion following
       the conclusion of the Proposed Transaction; and
-      the obtaining of all requisite regulatory approvals.

The expected effective date of the Proposed Transaction is 1 June 2016.

Overview of Cell C and rationale for the Proposed Transaction

With the introduction of a new management team in 2012, Cell C has succeeded in providing
consumers with market-leading products and services. To support these products and services,
Cell C has invested significantly in its network infrastructure. This renewed focus on enhancing
the quality of its network, broadening distribution channels and improving customer touch
points has delivered a positive turnaround in Cell C's financial and operational performance as
the subscriber base increased from approximately 9 million subscribers in 2012 to more than
22 million subscribers to date.

Cell C’s network, currently comprising more than 4,600 sites, addresses South Africa's core
voice segments, with 98% of the population covered. Cell C also offers 3G and LTE data services
to subscribers.
Blue Label is one of the leading distributors of pre-paid airtime and secured electronic tokens
of value in South Africa, India and Mexico.

Blue Label has, for a number of years, acted as a one of the primary distribution channels for
Cell C’s products. This has resulted in the development of a strong relationship between Blue
Label and Cell C. The Proposed Transaction provides a compelling value proposition to Blue
Label, as well as to Cell C and its customers, through vertical integration affording both
companies the opportunity to realise synergies in product distribution, and positioning Blue
Label to benefit from the improved operational and financial performance that the combined
platform would create.

Other

Blue Label has received significant support in writing from its shareholders for the Proposed
Transaction.

The Proposed Transaction is expected to be a category 1 transaction for Blue Label and a
detailed category 1 announcement will be issued in due course upon the finalisation of the
definitive transaction agreements.

The implementation of the Proposed Transaction could have a material impact on the price at
which Blue Label shares trade on the JSE Limited. Accordingly, Blue Label shareholders are
advised to exercise caution when dealing in their shares until a further announcement is made.

 By order of the Board
 Sandton

 10 December 2015

 Corporate advisor and sponsor to Blue Label
 Investec Bank Limited

 Legal advisor to Blue Label
 Werksmans Inc.

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