Cash Paymaster Services (CPS), a subsidiary of Nasdaq- and JSE-listed electronic payments company Net1 UEPS Technologies, has been awarded a five-year contract worth R10bn by the SA Social Security Agency. The will see CPS providing payment services for SA social grants across the country.

The award of the giant tender is subject to the execution of a service level agreement by 31 January. News of the contract win has sent Net1’s share price surging on the JSE. By 2pm on Wednesday, it was trading up by 37%, giving it a market value of R4,6bn.

Serge Belamant, CEO and chairman of Net1, says the deal will require the secure payment of approximately 15m monthly grants to 10m recipients in both rural and urban areas.

Belamant says Net1 considers SA strategically important and a potential “launch pad” for the company’s future growth in Africa generally and in other developing markets.

Net1 chief financial officer Herman Kotze says the deal is expected to have “a significant impact on the group’s financial results when the contract period commences as a result of new volume and pricing, additional costs, capital expenditure and additional contractual obligations”.

As the full financial impact of the deal is difficult to assess before the contract begins, Kotze says Net1 expects to be able to talk to the potential effects during its next scheduled earnings call on 10 February, once the service level agreement has been concluded. — Staff reporter, TechCentral