South African distributor Blue Label Telecoms is set to take a 35 per cent stake in operator Cell C, following months of speculation about the future of the country’s smallest mobile player.

According to South African publication TechCentral, Blue Label will inject ZAR4 billion ($262.4 million) of new capital, in a deal that will see current controlling shareholder Oger Telecom cutting its stake from 75 per cent to around 27 per cent.

The restructuring and new investment will also see Cell C’s debt cut significantly, with Oger Telecom also injecting fresh capital. Blue Label said that at the end of the process, Cell C’s debt should not be above ZAR8 billion.

Some 30 per cent of the company will be owned by employees, funded by financial institutions and then paid-down via dividends. Around 9 per cent will be in the hands of CellSAf, a black economic empowerment partner.

Last month, fixed line incumbent Telkom South Africa ended talks about an acquisition of Cell C, with reports attributing this to a difference of opinion over price.

According to TechCentral, Orange and TeliaSonera also considered a bid.

Jose Dos Santos, CEO of the operator, told the paper that the biggest obstacle to a deal has been debt restructuring, which has now happened with the support of Oger Telecom.

And Mark Levy, CEO of Blue Label Telecoms, said that despite its new relationship with Cell C, it is not looking to end its relationships with Vodacom and MTN – it distributes prepaid airtime for all three.

The deal is expected to close mid-2016.