Business

Vodacom and MTN to pay R2.26-billion to take over Nashua Mobile customers

Chris Spillane

South Africa's two biggest mobile phone companies will buy Nashua Mobile's 900 000 mobile subscribers after it deemed its model unsustainable.

Nashua Mobile will sell its mobile phone subscribers to MTN or Vodacom. (Supplied)

South Africa's Vodacom Group and MTN Group will buy mobile-phone subscribers from Nashua Mobile for R2.26-billion after the service provider deemed its business model unsustainable.

The country's biggest wireless operators will take on customers who signed up to their networks and services through Nashua Mobile, its Johannesburg-based owner Reunert Ltd said in a statement on Monday. Nashua finds South African mobile-phone users packages to suit them from the nation's network operators.

"The boards of Reunert and Nashua Mobile were required to consider the long-term prospects for Nashua Mobile" after a service-provider agreement with Vodacom and incentive deal with MTN expired, Reunert said. "After careful consideration, the boards concluded that it is unlikely that this business would generate acceptable returns."

Domestic voice revenue for South Africa's largest phone companies is being squeezed after the country's communications regulator cut the fees mobile carriers pay competitors to access their networks. Nashua Mobile, which sells products for South Africa's wireless operators, has more than 897 000 contract subscribers and about 700 employees, according to Reunert.

Reunert's shares have declined 1.9% this year to R67.22 a share, while Vodacom, which has the largest number of South African mobile-phone customers, has gained 3.4% to R37.50 through April 11's close.

Nashua Mobile hasn't agreed a deal with closely held Cell C for South Africa's third-biggest mobile subscriber base and is seeking alternatives, according to Reunert. – Bloomberg

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