Photo by: Bloomberg
Independent telecommunications solutions provider Nashua Mobile is gearing up to sell the relevant segments of its customer base to mobile operators MTN and Vodacom as parent company JSE-listed Reunert steps away from a “saturated, highly competitive” market.
The group announced on Monday that it had entered into separate and distinct sale agreements with MTN and Vodacom to dispose of the respective subscriber bases for a combined R2.26-billion excluding value-added tax.
In a “strategic” decision, Nashua Mobile did not renew its recently expired service provider and incentive agreements with Vodacom and MTN respectively, and would move to migrate the customer bases to the parties which maintain the current contractual arrangements with customers on the current terms, said Reunert executive director and Nashua Mobile CEO Mark Taylor.
Reunert needed to reconsider the long-term prospects for Nashua Mobile, as it was not expected to generate acceptable returns.
The company had been experiencing declining revenue, returns and cash flow on the back of decreasing average revenue per user, owing to lower network tariffs and lower out-of-bundle spend by customers, increased and higher levels of customer financing as more subscribers moved to expensive smart phones, a decline in the least-cost-routing business and competitive pricing in the market.
This had resulted in the mobile cellular service provider for South Africa’s four cellular networks assessing the sustainability of its business model when the agreements came up for renewal, explained Taylor.
Nashua Mobile was also pursuing various alternatives for the sale of its Cell C customer base to a third party.
Following the successful migration in the next few months, Nashua Mobile, which had 950 000 customers and 601 employees, would close its operations.
The transaction remained subject to the approval of the competition authorities and the successful migration of the Nashua Mobile customer base to each acquiring party.