Nashua Mobile is closing down after both its board of directors and that of its parent company Reunert decided that “it is unlikely that this (the) business would generate acceptable returns.” The move was announced during a Reunert shareholder meeting earlier today.
Nashua Mobile has already agreed to sell both its Vodacom and MTN subscribers to their respective operators and is in talks with a third-party to acquire the Cell C subscribers on its books.There will be no change for the customers once they have been transferred to their new owners, according to Nashua Mobile, with their contracts remaining the same until they are up for renewal.
The sale is expected to net the group a tidy sum of around R2.3 billion before VAT which will be used initially to settle any of Nashua Mobile’s outstanding debt followed by an investment into Reunert’s other projects and finally, if anything is left over, either as a dividend or as part of a fund for share repurchases.
The sale comes as Nashua Mobile’s agreements with the two largest cellular service providers come to an end and will also result in the closure of all of Nashua Mobile’s retail stores. Both the operations and customer services divisions of Nashua Mobile will remain open while the Competition Commission reviews the transactions for approval. Nashua Mobile CEO, Mark Taylor, has said that Reunert would try its best to “minimise the impact of this transaction on our (its) employees and we will make them a key focus of ours over the next while.”
Reunert sited the a loss in revenue from a combination of lower tariffs, which are set to move even lower with the new, lower, mobile termination rates, as well as a decline in out of bundle spending by its customers as the main reasons behind the decision to axe the business unit.