South African mobile reseller shuts up shop

South African mobile service reseller Nashua Mobile, which trades in subscriptions for the country’s main operators, is to close operations and sell its 750,000 users to Vodacom and MTN. The company is also looking to offload its Cell C customer base to a third party.

Reunert Limited, the holding company behind Nashua Mobile, said for the past several years Nashua has been trading in a saturated, highly competitive market and has experienced declining ARPU due to lower network tariffs and lower out of bundle spend by customers. Customer financing has also increased as more subscribers move to expensive smart phones requiring higher level customer funding, again leading to declining revenue, returns and cash flow.

The company will make around Rand2.26bn ($215m) from the deals.

“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,” the company said, essentially acknowledging that its business model is no longer viable.

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. It’s anticipated that the process will take a number of months to conclude, the company said.

Mark Taylor, Reunert executive director and Nashua Mobile CEO said: “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 make them a key focus of ours over the next while.”