Profits at Nashua Mobile plunged by 41% year on year in the six months to 31 March 2014, falling from R101,8m to R60,4m, parent Reunert disclosed in its interim results on Tuesday.
This was on the back of a 2% decline in revenue, from R1,85bn to R1,81bn, at the independent cellular service provider, whose customer base Reunert has decided to sell to the mobile network operators ahead of shutting down the business.
Operating profit at the unit declined by 35%, from R132,5m to R85,6m, the results showed.
In April, Reunert announced that it had entered into separate sale agreements with MTN and Vodacom to dispose of its subscriber base. Once concluded, which should take no more than six months, it intends disposing of Nashua Mobile.
The service provider has come under intense pressure following renegotiation of agreements with the mobile networks, which themselves are under pressure to cut costs as competitive pricing pressures grow across the industry.
Reunert’s decision to shut Nashua Mobile will leave Altron’s Altech Autopage as the country’s sole remaining independent cellular service provider. Altron CEO Robbie Venter recently told TechCentral that his company has no intention, at least not in the immediate future, of following Reunert’s example.
For its latest six-month period, Reunert reported an 8% decline in normalised headline earnings to 237,2c/share. Without the impact of Nashua Mobile, this would have climbed by 3%, to 200c/share.
The Nashua business as a whole increased revenue by 3% to R3,4bn. Without Nashua Mobile, revenue would have climbed by 10% to R1,6bn. Operating profit from continuing operations increased by 11% to R204,4m, while operating profit, including Nashua Mobile, decreased by 8% to R290m.
Nashua Office Automation reported an increase of 19% in revenue, while Nashua Communications reported a slight decrease in revenue. Sales and installations of Nashua Communications’ voice-over-Internet protocol solution continue to strengthen, while its Siemens/Unify business remained subdued, Reunert said.
Nashua Communications was “right-sized” last year, resulting in once-off restructuring costs that caused operating profits to dip slightly over last year.
Reunert has declared an interim dividend of 95c/share, unchanged from a year ago. — © 2014 NewsCentral Media