Nashua Mobile says its business model was unsustainable chiefly due to increased competition from companies that it worked for as a middleman.
“Five years ago their model was a very good one when they went to customers as the middlemen. However, the last five years have experienced an aggressive push by telecommunications companies themselves targeting customers on their own,” Spiwe Chireka, an ICT analyst at the International Development Corporation told CNBC Africa.
“These mobile companies are coming up with better packages and value added services and this has significantly reduced Nashua Mobile’s previous impact. As the two leading mobile telecommunications companies entered the market the margins that Nashua Mobile was offering was increasingly getting smaller and smaller which have implications to it,” she added.
The announcement comes after the expiry of Nashua Mobile’s service provider agreement with Vodacom and its incentive agreement with MTN.
The strategy that has been employed by these two large corporations meant that Nashua Mobile would compete with these superior companies for the same market.
According to the agreed deal, MTN will pay 90 per cent of disposal consideration on MTN take-on date, with the balance expected to be settled within 10 business days. Vodacom will pay 85 per cent of disposal consideration within five business days of its relocation date and the balance within five days.
Nashua Mobile is a subsidiary wholly owned by JSE-listed Company [DATA RLO:Reunert Limited].
“Nashua Mobile is pursuing various alternatives for the disposal by Nashua Mobile of its Cell C subscriber base,” noted Reunert.
The company warned its shareholders that they needed to exercise caution when dealing with Reunert shares due to this development.
BY TRUST MATSILELE