Although it is currently business as usual for Altech Autopage - the last significant on-seller of mobile products - it now has an opportunity to reinvent itself in the increasingly competitive mobile market.
After last week's surprise announcement that Nashua Mobile will sell its subscriber bases before eventually shutting down, questions have been raised over the future of the Altech unit. Listed parent company Altron says it is "business as usual" at the moment and no retrenchments are currently under way.
The company cannot comment on Autopage's current financial status as Altron is in a closed period. While the sector is under margin pressure - which has made Nashua Mobile's future unprofitable - Autopage does not seem to be suffering the same fate as it has been growing its subscriber base and improving operational profitability.
Yet, the provider - Altech's largest unit - has also been through a difficult time, having retrenched an unspecified number of people in January.
Less useful
Irnest Kaplan, MD of Kaplan Equity Analysts, says the biggest factor affecting third-party telecommunications providers is the pressure from the mobile operators, which are under the whip to eke out as much savings as possible, as voice revenue gains slow.
Kaplan says operators are likely to be more cautious when sharing margins with the third-party service providers when deals come up for renegotiation. He adds the upstream pressure has more to do with the current shape of the sector than the independent providers' business models.
However, Kaplan notes the third-party providers do not offer as much value as they potentially could, and margins could come down. These factors mean there is potentially less of a business case for such companies than there was in the initial heady days when cellular communication was new, he adds.
Ovum analyst Richard Hurst has noted companies such as Nashua Mobile and Autopage are essentially resellers, and add no real value to consumers' lives.
Autopage had just more than a million subscribers at the end of August, but saw revenue drop 4%, to R2.9 billion, in the first half of the year as gross connections did not meet expectations after it closed its outbound call centre.
Several years ago, there was a plethora of similar companies, but one of the last of these - iTalk Cellular - was bought by MTN in 2009. As a result, independent providers such as Teljoy, Smartcall, Africell and Glocell all but ceased to exist after being bought out, leaving only Nashua Mobile and Altech Autopage in the running.
New opportunities
Kaplan adds analysts have been saying for years that these providers have no place, but have so far been proven wrong. However, there is now probably less of a place for them in the market, although there may be other factors behind the scenes that outsiders are not aware of, he adds.
Now, with Nashua Mobile on its way out of the game, the last remaining player has a chance to reinvent itself, in what is being seen as a wake-up call for the sector, says Kaplan. He notes this could be a good opportunity for the group to innovate and come up with solutions that can offer value, preserve its base and aid its margins.
The group could also leverage the two-year-old integration between Autopage and Altech Technology Concepts (ATC). ATC, an Internet service provider focused on the small and medium segment, offers value-added services such as firewalls and hosted e-mails.
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