MTN, Vodacom to Acquire Users From Struggling Nashua Mobile

Apr 14, 2014 5:26 am ET

(Updates with Nashua CEO comment in third paragraph.)

April 14 (Bloomberg) -- South Africa’s Vodacom Group Ltd. and MTN Group Ltd. agreed to buy mobile-phone subscribers from Nashua Mobile (Pty) Ltd. for 2.26 billion rand ($215 million), ahead of a possible winding up of the service provider.

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 today. Nashua finds South African mobile-phone users packages to suit them from the nation’s network operators.

“Every retailer is selling mobile at the moment and there just aren’t enough customers to support the distribution,” Mark Taylor, chief executive officer of Nashua Mobile, said in a phone interview today. After the deals with MTN and Vodacom are complete, the next step would be “the winding up of the business and the brand,” Taylor said.

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. South Africa has about 130 mobile phone subscribers per 100 people as of end 2013, according to data compiled by Bloomberg.

Nashua Mobile, which sells products for South Africa’s wireless operators, has more than 897,000 contract subscribers and about 700 employees. About 400,000 of those users are signed up to Vodacom, according to the wireless operator’s spokesman Richard Boorman. Reunert also provides electrical engineering and computer services.

‘Eating Cash’

“The handset got so expensive and subsidies have come down over the years that we’re having to provide funding for customers and that was eating up a lot of our cash,” Nashua’s Taylor said.

Reunert shares rose 2.5 percent to 68.90 rand as of 11:22 a.m. in Johannesburg, the highest on an intraday basis since Jan. 20. They fell as much as 8.3 percent earlier. Vodacom, which has the largest number of South African mobile-phone customers, fell 0.4 percent to 136.99 rand, paring the year’s gains to 3 percent.

Nashua Mobile hasn’t agreed on a deal with closely held Cell C Pty Ltd. for South Africa’s third-biggest mobile subscriber base and is seeking alternative options, according to Reunert.