ALTECH AUTOPAGE PLANNING ON SELLING THEIR SUBSCRIBER BASES. WHAT NOW?

May 12, 2015

After months of speculation, Altron have finally announced that they are negotiating the sale of Altech Autopage’s mobile subscribers. Details are scarce at this stage with more information expected to be shared when Altron release their 2015 annual results tomorrow (13 May 2015). This post discusses what we may be able to expect should Altron proceed with the sale of Autopage’s subscriber base.

What has happened?

Autopage are the second Multi-network Service Provider planning to be disbanded in recent months with Nashua Mobile having sold their subscriber base in 2014. Nashua Mobile closed up shop after selling their Vodacom subscriber base to Vodacom, their MTN base to MTN, and their Cell C base to Autopage (in a move whose strategic justification may now be questioned).

Although it has yet to be confirmed, it may be assumed that Autopage may follow the same modus operandi by selling their Vodacom subscribers to Vodacom and MTN subscribers to MTN. With Cell C said to be under financial pressures, who knows what will happen to Autopage’s Cell C base. It seems the options at this stage are for Cell C to either fork out the money to buy the base, or for another party to scoop it up at a discount (as Autopage did with Nashua Mobile a few months ago).

The timing of these potential sales is still unclear and will be dependant on approval from the Competition Tribunal. Should this process follow the same time-frames as Nashua Mobile, we could expect that subscriber bases would be transferred within the next 6 months or so.

Why has it happened?

Altron have given the following rationale for this latest move in a statement to shareholders: “Altron’s decision to dispose of these subscriber bases has been based on, among others, the impacts of the ongoing mobile termination rate reductions, as well as continued industry and consumer deflationary pressures.”

In addition, the industry has seen margins from the cellular networks tightening as the networks try minimise their own costs, but that’s a story for a different post.

With Altron expected to announce some pretty poor results in the next day, this move may also be part of some broader restructuring or rationalisation of the business.

Was it expected?

After the Nashua Mobile announcement last year, many have said that it is just a matter of time before Autopage follow suite. Some more optimistic industry followers were hoping that Altron would be able to pull a rabbit out the hat and find a way to restructure the business that makes sense given the changing cellular and consumer electronic landscape, or to take advantage of the differentiated potential that a Multi-network Service Provider can offer to cellular consumers who relish the opportunity for some proper guidance on which cell phone package to choose across all networks. However, it is clear that none of those opportunities have been unlocked.

What does this mean for you as a customer?

If you’re an individual subscriber or have a few Autopage contracts for a single network, then this whole process should be seamless for you. All that will, presumably, happen is that your account will be transferred to the network’s service provider. This means that you’ll begin to receive billing directly from Vodacom (for example), rather than Autopage, and that you would now contact Vodacom for any support queries. This becomes a bit more of a headache for companies who have Autopage contracts which span across many networks, as they’ll now, presumably, have to liaise with those networks individually for support queries and will receive many different bills in their inboxes every month.

Where does that leave the industry?

Cellular operators are under increasing pressure as costs increase (due to ageing, outdated, and congested infrastructure and a weakening Rand), and mobile termination rates and Average Revenue Per User (or ARPUs) decrease. This leaves little room for any profit leakage within the operators’ business models. We have seen the impact of this with recent price hikes across nearly all the service providers, large scale retrenchments in the industry, as well as with the imminent extinction of the remaining Multi-network Service Providers. And who knows where the next cost cuts will come from?

So where does that leave cellular consumers?

Well, unfortunately with the departure of another big player, real competition in the cellular industry decreases. When you couple together this diminished competition with the fact that the four remaining network operators are tightening their belts, it may not bode well for consumers who are looking for more affordable, more innovative offerings. But on the bright side, there are some new players who are joining in the MVNO (Mobile Virtual Network Operator) space who may be able to shake things up a bit and provide consumers with some much needed alternatives.

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