Altron, which is set to publish year-end results tomorrow, says it is in advanced negotiations around selling Altech Autopage's GSM subscriber base.
The company, which has been trading under cautionary since 22 January, revealed this move in a statement to shareholders today.
Altron says its decision has been based on, among others, the impact of mobile termination rates on income, as well as "continued industry and consumer deflationary pressures".
Towards the end of September last year, the Independent Communications Authority of SA decreed mobile termination rates would remain at 20c until next September, after which they would drop to 16c, and then 13c in the final year to September 2017.
Cell C and Telkom Mobile will now be able to charge the duopoly 31c to terminate calls on their networks, which then drops to 24c and then 19c at the end of the glide path.
Should the deal go through, this will leave end-users without a third-party service provider after Nashua Mobile called it quits just over a year ago. Nashua Mobile's decision came as a result of increased competition between mobile operators in the saturated market.
Parent company Reunert noted shortly before the announcement that previous cut in mobile termination rates impacted revenue, and operating profit was dampened by reduced margins, because of a lower discount rate from Vodacom.
The service provider has also been affected by bad debts as consumers continue to face difficult financial conditions, noted Reunert. Its average revenue per user has also been declining, because of lower network tariffs and less out of bundle spending.
Dead opportunities?
Nashua Mobile had around 950 000 customers in total, and sold its MTN and Vodacom bases to the mobile duopoly, while Altech Autopage bought its 65 000-strong Cell C subscriber base for R91.5 million.
At the time, Altech CEO Craig Venter said the purchase would allow the company to broaden what it offers to customers. "We will continue to diversify the business from being purely a GSM service provider to delivering broader converged solutions, a strategy that is already paying dividends."
However, in a recent trading update, Altron noted the "anticipated recovery in the performance of Altech Autopage did not materialise in the second half, as market saturation and price deflation offset cost saving gains".
Shortly after Nashua Mobile's announcement, Altron CEO Robert Venter said Autopage saw upside in being the only independent service provider left in the market. He said it can now "offer the customer choice, differentiate ourselves from the networks and provide a unique offering to enterprises".
However, Venter noted there is no doubt the market is changing quickly. "That is why we started evolving Altech Autopage about a year ago from being a pure GSM business to being a converged offering business."
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