Reunert, the parent company of\u00a0 mobile service provider, Nashua Mobile, says it will look to wind down the business completely.<\/p>\n
On Monday, the listed ICT group announced that Nashua Mobile will dispose of its MTN and Vodacom subscriber bases saying that \u201cit is unlikely that this business would generate acceptable returns\u201d.<\/p>\n
The group said that the sale would generate a combined gross sum of R2.26 billion plus VAT.<\/p>\n
Nashua Mobile said that it entered into \u201cseparate and distinct sale agreements\u201d on 11 April 2014, to dispose of its MTN and Vodacom subscriber bases to the two biggest operators in South Africa.<\/p>\n
The group is also in talks to offload its Cell C subscriber base. Nashua Mobile is \u201cpursuing various alternatives for the disposal by Nashua Mobile of its Cell C subscriber base.\u201d<\/p>\n
“Approval from the competition authorities will be pursued as part of the conditions precedent and once received Nashua Mobile will wind down,” Reunert told BusinessTech in an emailed response. “It will not continue as a reseller.”<\/p>\n
When questioned about what will happen to Nashua Mobile\u2019s retail stores, Reunert said: “We are looking at all the options for our retail outlets. The networks and other service providers are interested in being given an opportunity to bid for the outlets. We will not be able to progress any of these options until the conditions precedent to the sales agreements have been finalised.”<\/p>\n
Reunert noted that there are approximately 600 permanent employees within the Nashua Mobile brand. “There will be retrenchments, but all options are being considered to place employees within the rest of the Reunert group and in the industry where possible.”<\/p>\n
“Unfortunately we are unable to be more specific until the conditions precedent in the sales agreements have been concluded,” it said.<\/p>\n
In a SENS announcement on Monday, Reunert said: \u201cThe boards of Reunert and Nashua Mobile were required to consider the long-term prospects for Nashua Mobile.<\/p>\n
\u201cAfter careful consideration, the boards concluded that it is unlikely that this business would generate acceptable returns.”<\/p>\n
Reunert said that the subscriber base sale proceeds will be used to settle liabilities of Nashua Mobile to support the growth strategy of Reunert, and for the payment of dividends and\/or repurchase of Reunert shares.<\/p>\n
In November, Reunert said that its Nashua business faced a challenging year, with the race for customers and declining business confidence impacting performance.<\/p>\n
Nashua saw revenue decline by 6% to R6.8 billion \u2013 while operating profit declined by 24% to R636 million, from R839 million in 2012.<\/p>\n
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