Nashua Mobile hit by LCR business

Reunert, the JSE-listed ICT group, says its subsidiary, Nashua Mobile continues to be affected by the decline in least cost router (LCR) business, slower turnover growth caused by the drop in interconnect rates and a market that is approaching saturation.

Reunert announced a 10% rise in revenue to R5.7 billion for the six months ended March 2012, from R5.2 billion before.

Operating profit rose by a healthy 18% to R736.1 million, from R625.5 million in 2011.
Reunert announced a gross cash dividend per share of 95 cents, from 77 cents per share before.

For Nashua Mobile, the group said the prepaid data market continues to grow strongly off a low base. Net connections increased by 35,151 in the six month period. The focus on mobile data and voice resulted in more than 27,000 net connections during the year (2011).

“These contracts, however, are generally at lower subscription rates. This is evidenced by the continued decline in the average revenue per user (ARPU), which has declined by 9% from September 2011.”

ARPU has slipped to R378, from R411 in 2011 and R426 in 2010.

“Despite the lack of growth in revenue, operating profit has increased as a consequence of cost control and productivity gains,” Reunert said.

It added that Nashua ECN is performing at expected levels. The conversion of the Nashua Mobile LCR base to the ECN VoIP platform is still in progress. David Rawlinson, chief executive said in a report at the end of 2011, that the conversion of its LCR business to ECN’s VoIP platform was expected to take 24 months.

Reunert acquired ECN Telecommunications business in June last year for R172 million.
The target set for 2012 is to convert 12 million LCR minutes over the year, at an expected rate of one million minutes per month, the group said.

“At the reporting date nine million minutes have been signed for conversion, of which nearly five million minutes are currently routing through ECN on a monthly basis.

“The number of voice minutes on the ECN network continues to grow, with volumes exceeding 60 million minutes per month,” Reunert said.

Nashua Mobile

March 2012 September 2011 March 2011
Subscriber base (closing at period end) 881,672 846,521 824,396
Number of subscribers signed up (connections) 99,634 93,790 80,361
ARPU (Rand) 378 411 426
Churn % – total 15 15 14
Churn % – excluding LCR 13
Number of retail outlets 150 150 150

Nashua grew revenues by 7% to R3.6 billion, off a high base; whilst operating profit grew by 20% to R403 million, compared to R336 million in 2011.

Looking ahead, Reunert said the telecoms environment in the mobile side remains challenging but added that it’s VoIP offering, and associated services, reflected encouraging growth off a low base.

Related articles

Reunert lifts H1 operating profit by 18%

Reunert points to improved H1 earnings

Reunert takes legal action against John Holdsworth and AppChat

Holdsworth accuses Reunert of delaying tactics

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Nashua Mobile hit by LCR business