Net1 UEPS wants to expand is geographical presence as well as its service offerings while it waits for the South African Social Security Agency (SASSA) to reissue a R10 billion payments tender that was declared invalid earlier this year.
Losing the deal could present the dual-listed company with financial exposure of between R41.5 million and R32 million, depending on how long it takes for a new tender to be awarded. However, Net1 is still confident its solution is the best to handle payments for the 15 million social grant recipients.
In the year to June, Net1 saw its revenue gain 29% in US currency, to $581.7 million (R6.2 billion), while net income came in at $70 million (R745.7 million), a 440% boost. Chairman and CEO Serge Belamant says, if the company does not win the deal the second time around, it will obviously be a setback for the group.
Yet, Belamant notes, it has diversified operations and revenues across multiple product lines and geographies. "Our revenues are sufficiently diverse and our balance sheet is strong enough to carry us through the loss of any important contract."
Adding diversity
Net1 aims to expand its mobile payment applications offerings in the US, India, Europe, Korea, and Africa, while locally it seeks to boost its financial services offerings by making aspects such as insurance and biometric ATMs available for those already using its services, says Belamant.
Earlier this year, the court ruled SASSA had 30 days to implement a new tender process, a period SASSA understood to mean until 5 June. It said in June it had started the process of issuing a new five-year tender. According to the ruling, if SASSA's request for proposals, which tests the market, shows it is not tenable to issue a new tender, it can continue to use Net1's services.
Belamant notes SASSA has yet to issue a new tender, and has not provided any updates since its June Constitutional Court filing. Net1 is confident, despite the trouble with the initial tender, that its biometric payment technology is still the best solution to handle grant payments, he adds.
"We are not aware of any other service provider that can offer a technological solution as robust and advanced as ours, nor the infrastructure that we have built over the last 15 years to distribute grants (especially in deep rural areas)."
Net1 has also been under investigation by the US Securities and Exchange Commission and the Department of Justice's Criminal Division to determine whether there was bribery involved in the R10 billion contract with SASSA.
Belamant adds the company has "cooperated fully" with the US Department of Justice and provided it with all the information it required some time ago. "It is up to them to decide what the next steps, if any, will be."
Share