US technology company Net 1 UEPS on Monday dropped plans to bid for a 10 billion rand ($845 million) contract to provide a service for paying welfare grants in South Africa, sending its Johannesburg-listed shares tumbling.
[DATA NT1:Net 1's] shares plunged as much as 9 per cent on the Johannesburg Stock Exchange but recovered slightly to trade 5 per cent lower at 160 rand by 1245 GMT. The All-share index was 0.35 per cent up.
Net 1's local unit, Cash Paymaster Services, was initially awarded the five-year contract in 2012 to disburse the monthly grant payments to about 10 million beneficiaries electronically.
South Africa's Constitutional Court last year ordered the South African Social Security Agency (SASSA) to reopen the bidding after the court found the tender process was flawed.
Net 1 was allowed to participate in the new tender process but said in April last year that it would not be able predict the timing of the award of the tender.
The company said in a statement on Monday it had decided to withdraw from the tender process and would not put in a bid as planned but would rather focus on other business activities.
Nearly 16.5 million beneficiaries receive income support in Africa's most advanced economy, Finance Minister Nhlanhla Nene said in February. The country of 53 million people plans to add another million to this safety net in the next three years.
Net 1 said it will instead focus on other transactional products, which it did not specify, that will allow it to serve the so-called unbanked and under-banked consumers.