There was an upside to being the remaining independent service provider after JSE-listed Reunert stepped away from a “saturated, highly competitive” market by shedding its Nashua Mobile unit, Allied Electronics (Altron) CEO Robert Venter said on Wednesday.

However, market pressures needed to be countered for subsidiary Altech Autopage, which fell under the auspices of the newly formed Altron Telecommunications, Multimedia and Technology (TMT) business, to shine in future.

Venter told Engineering News Online that Altron planned to diversify Autopage’s offering from purely GSM (global systems for mobile communications) to converged services, integrating voice, data and multimedia, on the back of a fast evolving market.

The unit, which was now well positioned to provide customers and enterprises with differentiated network choices and offerings, would narrow its focus to the automation and improvement of systems, cost-cutting initiatives and enterprise market penetration, with an end-to-end communications offering including mobile, data, private automated branch exchange, or PABX, and voice-over Internet protocol.

This emerged soon after Nashua Mobile announced plans to sell the relevant segments of its customer base to mobile operators MTN and Vodacom, as Nashua Mobile was not expected to generate acceptable returns for Reunert in future.

During the year to September, the Reunert subsidiary reported revenue decline of 6% to R6.8-billion, while operating profit declined by 24% from R839-million to R636-million.

The mobile cellular service provider for South Africa’s four cellular networks reassessed the sustainability of its business model when the agreements came up for renewal after experiencing declining revenue, returns and cash flow on the back of decreasing average revenue per user (ARPU) on the back of 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.

But despite revenue for Altech Autopage decreasing 9% to R5.5-billion during the year to February, with the 3% rise in earnings before interest, tax, depreciation and amortisation to R260-million not expected to be repeated owing to margin pressure, the group had moved forward with its renewals, cementing five-year deals with Vodacom, Cell C and MTN.

Altech was currently renegotiating the commercial terms of its commitments with Cell C and MTN, which were set to kick off on June 1, while Vodacom’s contract was one year old and would remain in place until the end of February 2018.

Altron TMT group executive and Altech CEO Craig Venter said Altech Autopage achieved subscriber growth of just short of 5% at 1.37-million during the year ended February, with churn maintained at “better than industry acceptable” levels.

Despite ARPU continuing on a downward trend, albeit at a slower rate, the ARPU’s of new subscribers and increasing full-circle data and telephony offerings to enterprises were encouraging.