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Ban on importation of recharge card pays off as foreign firms divest


News » Business
Nigeria

Image:  Recharge Card

May.01.2013

 

The directive of the Federal Government banning the importation of telephone recharge cards and vouchers into the country might have started paying off as some of the foreign firms involved in the business have started divesting from the country while the indigenous card manufacturers are thriving.

Daily Independent gathered that the demand for secure recharge vouchers being produced by foreign firms has reduced drastically, while the demand for cheaper non-secure products being produced by local suppliers has been increasing.

The government banned importation of recharge cards, among other things, in order to grow the nation’s economy.

Altech group of South Africa which held 75 percent stake in Altech West Africa (AWA), has sold off its 75 percent stake in the company. AWA which was incorporated and commenced business in Nigeria in 2005, produces cash recharge vouchers for the cellular network operators in the country.

While the telecoms and technology group listed on Johannesburg Stock Exchange more recently commenced the manufacture of plastic card products for Nigerian banks and other clients, the group stated that income from the business was not encouraging due to the delays in the up-take of plastic chip cards by banks.

“AWA has been highly profitable for most of the period since its inception, but became loss-making during the last 18 months, due to a reduction in demand for its secure recharge vouchers (as opposed to cheaper non-secure products made by other suppliers) and delays in the up-take of plastic chip cards by banks,” Altech said in a statement, noting further that its “pioneer industry” tax-free status expired recently.

The group said that taking into account the above factors, the costs involved in maintaining Altech management control of AWA from South Africa, additional investment required to enhance its production facilities, and the fact that AWA’s product area is non-core to the Altech group, it reached an agreement to dispose of its 75 percent interest.

Speaking on the issue, Altech CEO, Craig Venter said he was very “comforted” to see the last of its East and West Africa operations, which largely contributed towards the company’s heavy financial loss for the year ended February 2013.

From discontinued operations, following the disposal of its Telecommunication Network interests in East Africa, Altech pointed to a loss of 1.54 billion South African Rands from its operating activities, compared to a prior loss of 657 million South African Rands.

“Results from our East and West African operations were disappointing. However, with the disposal of these assets we are now in a position to unlock value from innovation and convergence through our remaining assets, and enhance our activity base by further exploiting our intellectual property,” said Venter.

“Furthermore, the disposal of the East and West African operations will see the termination of operating losses of 165 million South African Rands in East Africa and 39 million South African Rands in West Africa, totaling 204 million South African Rands ,” he added.

 

Article Credit: Daily Independent Newspaper

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Updated 6 Years ago
 

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