Nashua Mobile has concluded with Vodacom and MTN

Nashua Mobile has not renewed its agreements on the terms on which it was appointed as a service provider to MTN and Vodacom which recently expired.

April 14, 2014

Reunert Limited, a JSE Limited (JSE) listed entity and the holding company of Nashua Mobile, today issued a JSE Securities Exchange News Service announcement detailing a transaction that Nashua Mobile has concluded with Vodacom and MTN (MNOs).

Nashua Mobile has not renewed its agreements on the terms on which it was appointed as a service provider to MTN and Vodacom which recently expired. Pursuant to the termination of these agreements, Nashua Mobile will sell the relevant segments of its customer base to Vodacom and MTN. Concurrently, Nashua Mobile is also pursuing the sale of its Cell C customer base to a third party. The culmination of these transactions will result in the closure of Nashua Mobile and its operations. The applicable segments of the Nashua Mobile customer base will be migrated to the relevant acquiring parties who will maintain the current contractual arrangements with customers on the current terms.

The timing of this transaction is subject to the approval of the Competition Authorities and the successful migration of the Nashua Mobile customer base to each acquiring party. It is anticipated that these processes will take a number of months to conclude. Prior to a final outcome from the Competition Authorities and the customer migration process, Nashua Mobile’s operations and customer services will continue uninterrupted in the market and Nashua Mobile customers will continue to receive the highest levels of service.

For the past several years Nashua Mobile has been trading in a saturated, highly competitive market. It has experienced declining Average Revenue Per User (ARPU) due to lower network tariffs and lower out of bundle spend by customers. The decline in the least cost routing (LCR) business and competitive pricing in the market have further reduced revenue. Customer financing has increased as more subscribers move to expensive smart phones requiring higher levels of customer funding. These factors have contributed towards declining revenue, returns and cash flow. This resulted in a requirement for Nashua Mobile to assess the sustainability of its business model when it’s Service Provider and Incentive agreements came up for renewal.

Commenting on the transaction, Mark Taylor, Reunert Executive Director and Nashua Mobile CEO says, “This was a strategic decision on our part. Our priority now is to ensure that we maintain our service levels to our customers and that they are migrated seamlessly. We are also working hard to ensure that we minimise the impact of this transaction on our employees and we will make them a key focus of ours over the next while.”