Lesaka (LSAK)

Dhruv Chopra Head of IR
Herman Kotzé CEO
Alex Smith CFO
Allen Klee Maxim Group
John Flynn WEDGE Capital Management
Will Settle Woodmont
Call transcript
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Good afternoon, ladies and gentlemen, and welcome to Net 1's UEPS Quarter 3 2018 Earnings Conference Call. All participants will be listen-only mode. [Operator Instructions] Please note that the conference is being recorded. I'll now hand the conference over to Mr. Dhruv Chopra. sir. ahead, go Please

Dhruv Chopra

Welcome on third our the our Smith. Kotzé; Judith. call. CEO, XXXX With and Alex CFO, me call new to you, quarter our earnings Herman Thank today is

XX-Q press Relations Investor and Our ir.netX.com. Form supplementary presentation on website, are financial our available release,

with statements, the and reminder, a associated cautionary and in press release forward-looking language regarding call, ask the you uncertainties be making we contained statements. As I will to XX-Q risks this certain during and forward-looking look at our

In reconciliation addition, we call, most will be measures, and measures. using financial during this non-GAAP the certain we've of to GAAP non-GAAP provided measures comparable a directly these

our Rand trends of our discuss in a We results will underlying XX-Q non-GAAP to We understanding our the measure. in our and release press assist in which in South investors in African Rand, analyzed our is operations results business. of

South fluctuations by U.S. As dollar be significantly you affected the Rand. results can know, between the the African currency company's and

We will following remarks. have prepared session a question-and-answer our

So over to turn Herman. the call with me that, let

Herman Kotzé

with. Thank to have shareholders. quarter, first multiple our X, post all to for an you, almost emotions deal morning In in SASSA we our world Good Dhruv. Net

focus burdened being Net or drive quarter. return being validated by their with of trajectory. in including growth the DNI fourth International SASSA as time, for the no to excluded internationally reports. energies without XXXX, financially current and Development, refocusing inclusion on African financial strategy wind a have expected leading South businesses, by On not inclusion for echelon we IPG sometimes contractor actions we run of positioned rebuild clear companies. to drive the expect that on largest and Life, Minister freedom hope of X to we the financial per past gratified are social Mr. as a we and internationally, confidence we and constitutional are as short-term, have to to the plan have recent We our South state disruption role X beyond have we to of growth on it With in to its meaningful, distribution past initiatives incredibly of South South grant new ZAR At years, abroad, our sustain increases of playing our the hostile proudly fixed our one inclusion in the one our same the most the biometric a of and made Net within credibility return to technology for and motivations. a profitable Fintech solutions time SASSA the have to In world's starting X and Susan a and years, of by burdened that and C of and and hand, programs, African, consistently CPS, and citizens save as South billion grant has Moneyline, visibility term financial growth tangible able are public continue and longer and be using be environment. focus Social will to finally expect we annual year Shabangu will to political X paying restructuring over our the now in abundantly in strategy, CPS Africa execution, company Smart in political Africa is Net business successful Cell to the our businesses, our and bandwidth obligations, our while steps X to down for our and taken without contracts September X organ to deliver other and or benefits our distribution the the well social The the the treasury that African

spend Before into affairs with state the on of minutes CPS of our and current me a grants. few future, let delving the distribution

As for period the through XXXX, to payment months million the pay-points constitutional distribution X SASSA terms contract. contract of as conditions social a aware, classified extended to extension is beneficiaries are previous September you currently with of approximately our as This the same are are the grants and who beneficiaries. paid the and at X.X for court cash on

predominantly The the at Court we dealt on with order grant and that and people, assume people were payments responsibility refer the presume does the million the However, million to million us does bank ZARXX.XX at biometric beneficiaries need because pay-points, are to not assumed and be pay-points we through fee and by National Office the be National We ask in would infrastructure week X that the that Grindrod X.X our We accordance managed asked plans the the regardless to increase the business. account, able base for approximately cash court. SASSA's therefore grant system, will regarding remaining paid paid this ZARXX.XX, and April Constitutional grant million and these currently March, the X for to currently the into Treasury silent did paid Constitutional of last request have of the paid of pertaining and volumes at an take stated for the which so Bank effective recipient number Treasury's approach recommendation treasury the their Court order not for ConCourt maintain other our request VAT X.X as grant not matter directly to permitted distribution to people component, And by ATM is SASSA back most the with per recipient We the recipients Post per to X.X the did South us in Treasury. for networks. recognize of of that be payments end African into paid. people expensive an banking National portion excluding point-of-sale our for to X. agency million this only proposed SASSA's underwritten our believe that accounts, paid

ensure no Office were the However, fee that beneficiaries in we to a ensure that to end infrastructure left costs to able it time with users Grindrod banking state time at to the on the SASSA to been And however, service, would partner choice, services the to have to. our a people service, got significant continuing and payment that in close was were but organ the grants. the recovered the the publicly have that of take and relevant and responsibilities they not ready on to over paying the been of with disruption which at accustomed or be without The is these has And stepped for no levy that fulfill would comes distribution people for fact vilified. issue, cost. the SASSA longer of The would only disadvantaged as accounts, paid have who matter and in by the resulted other and would Post challenge, provision beneficiaries, to but system. the in most, option namely our provide

in last contract Therefore, or Office pay-points to beneficiaries that conceded if risks function. will in fulfill our years. and ConCourt, January in where unable SASSA we for of the to our for recall the nature. attention, last beyond in population basis we infrastructure We tender our our importantly not tender on But the to may this terminates government, the had to focus over we at of and unlikely provide may technology advertised X it the are new the provider. through tender in at brings received to the to to we We payment this September. is summarize, services commencing of in story if tender that today importantly had the did to due well new result will end process resume. of of to when we've chapter are being resources, regarding unbanked from participation X tender tender grants skills of this tender we the a and or there with of as outsourced prospective the the legal reputational, know participated evaluate do that September the cusp SASSA the who us ago, most that, the continue completeness the support X-year That future. Post endure particular financial exciting to on committee the XXXX, are bid objections suspended as weeks the publish and period call an earnings response, to in You contract process of the Minister headed continue a extension a are of the country. did the bidder more evaluation document that appointed our file where logistics Net and to have repeat the Around fact the the not not valuation required our will tender the events an when from after X

EasyPay As begun further offering branch X gain has we or set over to our product have Everywhere and highlighted past ATM of traction. quarters, expansion EPE the and the infrastructure already

components, During the growth third and meaningful driving improvement saw all positive our in a momentum. key quarter, we

accelerate to fiscal in the and this expect quarter XXXX. fourth We in

have a morning, X.X accounts we ago. million to compared As of reached year million X.XX this EPE

to ATMs expected months XXX and to over next is also of branches next XX likely XX to double meaningfully months. XX infrastructure branch expand the Our over X,XXX the our are

In digital we we largest also service to of target that in have, market as expansion the has service To will the the largest addition, have the marketing the the nationwide redeploy been commenced for and off largest radio, available country. and all plans, the infrastructure life across retail value-added to supplement phase that SASSA, print dedicated provider, campaign bank will we ensure insurer lender, become remain our will our and provider servicing channels. we contract

Cell effectively In voice, launched starting financial early lifestyle content and from to which in data we May, and new product products, incorporates a services C. addition services priced banking also

including we includes in to initiation the of efforts of the become for can In next cards addition completed nationwide, issued inclusion by South transactional transactions a should account be X any which our certification of fixed exceed Africans, Africa, Finbond to approximately certified through issuer certified total cash working Cell our are dispensers additionally bank. C DNI X,XXX direct of debit each have financial current steps already closely to we to to urban opportunity taken people, our focused the nationwide. footprint, financial services And cross-sell compared and our of to expect EMV million addressable XX on our also per our and rural XX Associates months. ZARXX accept in that million process Finbond our our mostly cards we sales mobile XXX each is X South their those now leverage drive summarize to to Incremental force with market, To their other from branches ARPU forward, ATMs, believe inclusion and UEPS/EMV to average month.

penetration target would first XX be to achieve XX% within months. Our

While currently will you become know, the on how and group I subsidiary a now South Competition and Cell which we strategy. increase Africa, we will business. from DNI, Starting as and XX% discuss the C consolidate tie our with pending our when into and ownership confirmation will to DNI, they DNI we of, Commission, own XX%,

our ZAR to market the on new QX the the For in $XX ending XXXX. million their Cell revenue growth today, on to flow and or strides million to to of its million of million XXXX C June advance with profitability income $XXX listing DNI tremendous profits past for billion and business XXXX billion its XXX post the at million of advancements to early reiterate period expects months. clarity, anticipated approximately revenue QX in of $XXX generate X XXX in Its of should share, recapitalization XXXX profit the our to ZARX.X will has ZAR exchange statement. DNI's trajectory and after quantum rate. meaningful be in net made gains maintaining products consolidated, management DNI sometime over business revenue continue $XX basis, through tax and expects to a stand-alone translated And our rate, XX-month or million a ZARX.X

Net to Cell have bundled C we products X the pursuing tremendous while other's newly On value business just also launched networks. cross-pollination to side, our of X customers users, defined provide distribution each that

to have first SIM cards. X for order STSX, focus prepaid subject XXXX, highlight cryptographic token industry for of shifting we our and by our years efforts, around cards want which to vending International the traversed X Additionally, solutions. Africa of which initiative utility during we and South to further revolves ago, was we million our further the which X. order vending growth is standard before developed C, QX Several prepaid Net and million in Cell received a SIM one I delivered

out we that we mover tokens available basis, to standard end a will no come millions providing all first of While of and their logistically in longer world, the in open allows as a source have require utilities on actual over tens prepaid advantage This swap to the to generate utilities basis. physically the recurring significant they fee the made of meters have cycle. an on standard life the households interface

and are, now of have contracting this cycle start utility Africa QX largest at Africa. in XXXX, with We these upgrade Eskom, the And we the therefore, kicked all utility a company multiyear companies. initiative of South off by in by

Utility Africa month. demonstrated will Week industry be this Association this later solution body, Our the the STS at by

under we group's the payments currently restructuring Net TransactXX Last assets new Bank Services, known our or Group non-core of Meyer, the the investment discontinued been Financial stewardship Payments a International into commenced business X in on Germany, activities have and strategy its quarter, with Philip Frick. now incorporates Malta, and This under IPG International sold. comprehensive or our in Moving structure end-to-end now International the IPG Masterpayment internally. as to Masterpayment is of place management business. The provider,

customers this non-payment we XXXX, capital book business solutions the QX Bank to QX and Frick working XXXX. for During in exit decided sold remaining to financing

working focused business. also This and on expansion subsequently their rapid Masterpayment capital ways agreed initial plan, management business of quarter, a the part which we discarded team the with to extensively

events group, space. impairment the of change cryptocurrency certain the non-cash in solutions through result processing in business decided the towards take the following strategy cryptocurrency a a volumes We our through quarter saw its IPG subsequently payment and in focus As tapered the we January, against of to Masterpayment news charge off volume goodwill. in meaningful

X's Europe services; became exchanges player offer Masterpayment acquiring, processing approval the providers, ICOs, to developers, other a saw XXXX kick on as has provide only QX important and division We management platform, prepaid moment, its well investing payments businesses progressive that processing all offerings built Liechtenstein offer in be year core and laundering and manage regulators. for new and tokens for at up system IPG governments to are different next pipeline for later turn companies. card classical known our in capitalize now regulated like provision is and both continue major to on banking Beside during essential IPG's commercializing custodial XX% to its fact the XXXX. blockchain A: bank, increased fiat these opportunity the It of providers, the UnionPay to for cryptocurrency the clearing, expected issuing Frick new and marketing products ICOs, clearing, exchange year-end its heavily XXX a meaningful to with blockchain demand access services, needs China TXX are count Net income Swiss and over in in and blockchain crypto and is million expected cost KYC franc investors infrastructure we supported the players increase as Frick on space from blockchain differentiated covers the the as year. which the mainly all around events. applied coming by assets also access membership and target net bank is custodian all have IPG's almost are IPG's reputation processing offerings solid a launched volume, half IT Switzerland Bank also the easily across of payment providing markets safe and with under safe their of cryptocurrency currency. management to change continue for from a an of has or cryptocurrency and because smart supported recently, and solution before, CHFX.X and issue Frick main of ICOs we professional Bank expertise, such Bank in focus all storage see will heightened as processing developing all this accounts technology blockchain anti-money of models under lawyers area to in X or volatility SEPA its doubled that dozen and limit crypto B: first the company. receive multicurrency fully by based expect the the over issuing to not It Frick, called The new Liechtenstein China consultants, during can results strategy. and is and execution we off a to fiat focus has X on to and to the XX%. stable their opportunity. to the active custody We complete expects growth during bank we expect and very ICOs. blockchain new has and reported certificate and a XXXX a tokens to blockchain build staff in initial contract in months. from to Kaleidoscope, destinations, liquidity therefore coin to first cryptocurrencies, for as this services list little while fiscal start this and includes participants the solutions, process field. business blockchain out Bank to payment

second the generation for core exchanges, knowhow, new verification revolutionize investors accessible financing X's highly and biometric of but to secure, easily model smart hardware solution contracts crypto a businesses. storage large asset utilizing security and and around capital-intensive cryptographic Net cold revolves utilizing first The crypto asset

are In technical on new India, as our delayed effect into of VCC further models March guidelines X. year-end central or Virtual KYC, refined. bank's call which Credit our on We been the to our will solutions and Card had launch more commercial due the details provide came on

However, XX, all of while have already weeks, new our base users the pleased now the MobiKwik daily VCC I'm we April to small X XX. IOS have on went up transaction has Android with live first we and app addressed signed this state version doubled the version April In changes the already and that the went volume. on live XX,XXX

months coming in We further get we more progress will provide as updates the quarters. and data

also XXXX, India. became During we've provider QX VISA-certified in service a ACS

UEPS/EMV process of We we terms analysis opportunities the in opportunities, the refining our have size are continue timing, of lines. with execution in of and International we identified time and

During quarter, evaluated in we least the America. Africa across projects at Central new third and potential X countries

to Lastly you the on give Korea. hand before I discuss an financials, to let Alex over me update

negotiations As we regulatory to ongoing. still as volume in are due have market line players pricing. squeezed between the changes noted, out our to by remains issuers, pressure growth are we driven as growth, agents and companies smaller see under the continue VAN share gains But top

businesses, very KSNET's seen turn traction with businesses, revenue the gateway to finance have and positive. banking but not We capital these good growth working enough yet VAN, big non-card payment are namely VAN

opening EBITDA, between of that growth linear various revenue usual our many Alex these the single-digit be lag delighted also correlation with before continue with To pricing calendar are next low month. negative to outcome returning revenue drag these may Financial in more in growth XXXX, Alex performance welcome the is variables adjustments new for our influence card due some to on issuers and and I especially March earnings through meeting do agents. financial before over to X. and negotiations expect XXXX. that the the in am we But up York came New between Smith, I go Officer, on forward reported commitment of you of and look will expectation it There to Our on events. now our Q&A. revenue detail will growth results KSNET's timing continue to a metrics as engage shareholders, Chief who board to the

Alex Smith

the compared and quarter the Herman, ago. will morning discuss and segments you, results year shareholders. key XXXX to Thank our operating all a within of our good third I trends to for

currency. dollar XXXX down up Rand approximately our For exchange $XXX dollar-based a year-over-year ZARXX.XX was rate ago, QX in QX in XX%. of ZARXX.XX compared million dollars impacted XXXX, was year X% XX% and which to positively results in by constant Revenue our U.S. average of

and Our increased Cell of per constant-currency includes our on tax fair C recognized net Cell improving of in fundamental by significant generated included noncash $X.XX. related as in in double-digit of earnings adjustment line due to to QX C we has fundamental company's XXX% approximately and relative profitability, value share by been value included increase well investment from amount investment investment a as a top to products. XXXX, a assessment basis returns our This the for its it be of growth earnings, new believe because this to subscriber appropriate the is driven performance. the any We

an XXXX, that purchased CPS last and October The fixed X% parties, the this on given goods grant of for a to constant-currency accounts its primarily to quarterly now to revenue is in a the ATM adversely and transactions. South By and processing were higher to Operating income the strategy related team increase management in growth by X profitability The the QX in earlier. Our results up impact Group. segment by increases an per and at as year-over-year Herman basis. U.S. number in $XX as of million Payments annual of monthly in Masterpayment strategy in of change Masterpayment reported fee Financial XX% IPG EPE due margin has salary primarily impairment discussed loss and dollars years. as transaction third intersegment revenue focused decreased on a segment, its was and been XXXX, increases International business African from fact of refocus delivering charges, impacted result due on $XX.X declining part processing recipient the of services in transaction million Services the goodwill

respectively. income operating and Our was for margin XXXX QX XX%, and XX% XXXX

processing range The International to fiscal remain revenue for quarter in launched QX of was of South an processing we margins visibility, processing December expect higher particularly cryptocurrency XX% than XX% increase to segment XXXX income processing Korea by generated the XX% of to a restructuring million to maybe in and The impacted the in XXXX, fees in loss, at transaction an offset of in our XXXX. of impairment XXXX severance current activities segment during QX QX the in XXXX. ad was to partially by our transaction result income QX impact margin $XX.X in Given fourth in Operating as governing Korea. Masterpayment's to changes XXXX. charged increase due million XXXX. revenue adversely refund of operating African hoc related the transactions, payments $X.X positive taxes QX regulations lower costs card a operating operating the for X% indirect was in Masterpayment, negative XX% that compared of margin on

Masterpayment and of segment million margin the taxes, X%, income impairment respectively. operating $X.X and indirect Excluding the were and refund

XX% refund For in XXXX, the excluding KSNET's and compared due won year XX% in taxes. Korean the XX% EBITDA communicated. last Korean was revenue by to regulations, XXXX QX million benefits increased QX after X% changes to $X.X in of while of declined previously $XX.X to to reduction as indirect million, the margin This

we XXXX. continue an remainder effect on stated, the of Herman results impact As expect to have to for reported adverse calendar this

in the expect VAN the to operating we challenging calendar companies landscape although stabilize regulatory forward, the Looking South Korea. remains XXXX, in for performance

CapEx expect XXXX. in half higher fiscal first was XXXX QX expenditure to below back of levels IT return in CapEx this experienced the last to quarter, the the end on and was historical than we to equipment due While infrastructure, and

in we substantial the a in space, potential processing opportunity see combined we XXXX. this the with experienced in discussed, some Herman of other saw QX the growth As Masterpayment revenue and transaction IPG in the cryptocurrency lead contribution a in to greater we though leverage area, group gain small is currently this results. the operational from relatively contributor increasing as a this to can This from opportunities volumes,

revenue QX up QX For segment's account that grew XX% perspective, for XX% by make now the in business compared to year-over-year almost XXXX. XXXX, in of and revenue XX% IPG, units this

and but X% value-added primarily in in commensurate XXXX lending and offset in was as revenue income X% book. financial Operating partially insurance by basis. fewer finance due loans revenue constant-currency services in in well a the and inclusion increase increase resulting from up dollars, Rand, impacted as and U.S. our by applied increase Our also In compared an in QX receivable airtime down $XX to allowance these QX technology businesses, other our sales, factors a was segment increased for with intersegment doubtful African an decreased, volumes prepaid lending South XXXX, revenues. million on segment

Our gross lending book, and million the at XXXX. the capital QX comprising compared billion at service of end fees ZARXXX out end to was ZARX.X QX of deferred approximately XXXX, of

X, not during grown tightened further risk. the have credit to sequentially We lending book quarter our as we manage lending refined criteria and our

EPE of sustain believe to branch continue along our expansion commensurate X.X our growth, will infrastructures. XX, We and financial services million segment's offerings accounts. this with ATM At April we approximately had

by and of more making in fewer us momentum, at improved revenues and revenues margin QX product segment by Smart impacted and for segment. our than of policies was insurance businesses this business, to Life, inclusion sold continues the largest of was and the sales, insurance sustain margin insurance XXX,XXX one market to an we've the Our its end April, intersegment Operating increase income fees. life technology applied financial compensation, during lower a and and and in partially XXXX, was Rand-denominated each prepaid to lower low XX% from offset XXXX providers products. services third to businesses relative various be the margin expenditures The segment by to annual director's South the of affected services of rate the African due have Corporate will by primarily offset executive goods and salary this parties decreased, transaction-related segment modest contributions increase financial operating employees. our which this increases expenses in our and granted adoption continue purchased from in various

for in we higher interest XXXX partially income by from net with XXXX result QX and Frick year. compared of to primarily obtained million from as to a $XX,XXX offset earnings and high expense, investments fund income Cell reported QX We contributed interest to a due recognized C accounted investment the $X.X last $X equity somewhat interest South facility full quarter. the to our DNI of interest Our during African driven recorded DNI, listed note. decreased million, Bank

X business, the fourth reported for Finbond We our because include will subsidiary to a results further $X.X the QX consolidated the Johannesburg income expenditures authorities. the DNI contribution by would correspondingly. hope going million end computer is quarter competition South of forward. ATMs subject African have first In with on quarter. agreed become only in listed its subscribe before term equipment However, X% and be acquisition primarily we is the to South then a equity Africa, the the and Net approved, increased its to of have currently X-month and processing XXXX is Exchange, $X.X and results were DNI's due of we offset and for Capital partially of million approval occur will XX% but XXXX in reduce loan XXXX. by compared transaction respectively, that sales of the event fiscal DNI, income South during Stock will own which Korea Korea year, which South in to fewer and while data

and capital XXXX, and full, primarily our offset the lending repayments South and fund in long-term and C our XX, by in from by of was DNI, the cash activities. lending March African short-term balances XXXX. repayment African million in scheduled book cash XXXX, listed Cell a debt our expect investments which all investments to debt, XXXX to expenditures cash June most partially Bank unscheduled in Frick, to our our XX, South our facilities, Korean $X our continue due million. equivalents our from our our repayment note, We core capital our were $XX.X our Apart At we of The were quarterly business decrease the cash to than be from cash generated and cash in expenditures, the operations of arrangements, growth utilizing European generated reserves of of businesses. capital group's continue lower

African fund We used South in XXXX facilities and under our expect to investments. of majority interest principal the to repay lending to our internal generated be fiscal our cash and growth

payment Rate and million facilities under the is March million Principal Voluntary D on we early facility B, are XX, due and each had XXXX, payments a are penalties. million June in African XXXX, our Principal JIBAR D. A Johannesburg and investment on and which June million quarterly loans X.XX%. X ZARXX.X ZARXXX.X DNI. a of ZARXXX ZARXXX.X margin long-term the facilities repayments we or ZARXXX.X into comprise ZARXXX the on complete due due facility facilities, million Interest the the quarter of without of commencing assuming X XXXX, Interbank in As installments, per on installments, prepayments in million facility thereafter. under permitted are under debt Agreed fees B facility outstanding X of comprising are repayment or plus and based A outstanding South repayments in loan

million to Our million expense in compared $XX.X XXXX. QX, was tax XXXX $XX.X

federal the statutory rate for effective African Our which loss, the non-deductible rate changes than our a long-term and on as statutory expenses, interest of law. non-deductible U.S. result the South was South tax fiscal expenditure in and impact of higher XXXX and impairment was tax XXX.X% include the facility, transaction-related African

our rate to the valuation X.X loss of effective to expect in the XX% the XX% doubtful impairment and allowance excluding in for be allowance the accounts related million to the impact range, to recorded continue XXXX QX. We

Our for QX shares was at least fundamental from To on guidance share conclude and quarter, last million the remain to of in March versus X XXXX QX sold XXXX. reiterate fiscal XX our XX.X earnings actual our Compared due million per weighted our anticipate QX we to was XXXX $X.XX. shares. inclusion share million count XXXX, weighted share with for share higher XX.X of count to count

Our and Including between XXXX. and expect the of ZAR dollar, fair any and shares of fair XX% a value a base XX.XX assets to to a guidance tax adjustments, count rate per related our million to share currency constant in excludes earnings we of XX.X XX%. assumes $X fiscal adjustments available-for-sale exceed value share fundamental

our always constant-currency for and recent For now strengthening not call of on a South up We the the Q&A. clarity, is the does Rand. basis guidance as reflect can African open


first The Allen Instructions] Thank from of Maxim you sir. comes Klee Group. question much, [Operator very

Allen Klee

to Can to about there served? a you population the offerings how the of you advantage grow ability some they continue other Post in cards about it, offering - had to Yes, have? Office competitive little as And environment you compare good is your how morning. will any competitive the change you and to talk the what's be EasyPay if think the that

Herman Kotzé

Sure. Thanks, Allen.

the thing understand a on we base cards. to the have of EPE that think, is first EasyPay the Everywhere, million offering, already X.X I

offering of this Office. substantial South differentiate brand. we're well-respected by in there are African a that So think player already from well-known We It is And other those believe we it's a a to offered our space. It's things including the institutions, product. a couple well-known like a Post brand.

we in first our customer their The the of and their actually infrastructure the so we or down areas have of the country. branches rural Most we retail increased over presence closed African our the the have contrast, service to South or available last base. By decade deployed that banks is have presence. that have

based infrastructures. increase the much rural the do are the And on that our branches months, Finbond, hope those associates' the us be right gives to branches of XXX where they next base we service have today, we substantially allows so efficiently semi-rural also to That mainly obviously be ability those most have and of to to all and over much along to able from couple in effectively, and live visible we which that with the to marketing more ground. people, the us customer more investments

pricing one revolves The second the compelling the of think thing product. we differentiators that is for our around

a we got Again, that of developed years free network. one the to make of bundle substantially for by that funeral the To example, process insurance These give on we've every made a ourselves beneficiaries, or ATM us products own most you other own we cover. and offerings function ATM number our Rand, are thousand the than of X our country. over our the believe offerings of of to life differentiating compare so-called or lifestyle we those through so. X.X when services available gives service able again, provide mobile a an edge. banks quite cheaper transactions available. provide then equivalent our that to us And us, the added, that And value-added they last our being EPE that, we've point-of-sale we or that's in So up we customers are the retail

the additional the cardholder. And an new Africa. right to we what with we benefit, have that's available the cheapest So them now services in in is free South also products provide Cell think collaboration with voice which defined content that to access and to we data completely them C, they is where

a that all we offering a is market the So of it's out that those compelling combination believe target to of there. we

Allen Klee

a like and Thank last more? with you. of a just your little And and business. that just the expand on synergies part talked how existing DNI. Could It following yes, sounded then, that there opportunity little the up on about you Cell with growth C you

Herman Kotzé

Yes, sure.

hope in DNI end So to controlling have. by hopefully so us DNI a we complements fiscal assets XX June. in that stake itself, obviously, infrastructure a have that what already brings business we of the of to this by year, variety and

the greater mobile-based, on Today are around semi-rural African areas on are within infrastructure packs, are religious is and focused rural the active events, country to of urban the very that airtime population, gatherings, they So cards in of vehicles provision roughly DNI, the all Net SIM very prepaid et in sport around X employees travel Whereas service are more et based. they They so events, they employees. mainly classic starter country. the focus population. large so These so the we've cetera. South to and X,XXX got minibus cetera, our

hoped to an mobile obviously the Similarly, also It So a we of operators be. one big services. around a runs Cell brings weren't branches. the as urban from we the to had country. strong C It footprint has infrastructure container Cell perspective, areas of the operates portion DNI where us also traditionally as is C also

so And this so across and would an close between talking airtime this Cell to X,XXX all partnership our leverage and and relationship able we C hope credit infrastructure, be is to product. through X, product, people, and bank we insurance the it's and workforces the to time, products, C, over to believe X,XXX Net X,XXX we're or whether what to country, we also DNI it's that to we having Cell sell about our be probably locations of possible. combined will product fulfill And service actually an that able by a only probably company,

Allen Klee

to offset the think revenue And longer earnings? about ability Okay. term other and do doing South to the SASSA-related able of of offerings how loss in things of Thank the Africa you. you you're these and type be

Herman Kotzé

-- will of believe offset a it SASSA severance we term, have the we the that with the earnings long result that loss will the relationship of we more in as Well, SASSA. than of

terms relationship SASSA the moment, grant to really very performing So get We the simple SASSA fee infrastructure. a is of payment, at paid the any restricted with and fixed a with the we do a one. are CPS other or in functions

target million portion going should maintain I of will targeting card. XX% what fact hope our convince it XX So for we've workforce, base full singularly to convert all really or infrastructure on and associated marketing point-of-sale in market unlocked that is with of can and terms discussion along convince that in Net be distribution effectively payment them. has profitability the short it's revenue space the got the capacity, be XX.X earlier, what we infrastructure we order a is. is the to need all we of certainly not of focused Once a contract X,XXX the very time, in the And service. a for meant today last of But we're they recipients certainly people that to we us product single that that everybody indicated, the terms grant providing be X of moment, or will my with we're able profitability ATMs, roughly of X don't and we for of replace significant over Like months, to I believe XX to of ultimately convert as that able and the part us we the the levels. convert aware to in SASSA believe understand the we that we an to all Obviously, next to current think able years. EPE about at

So million people. million between market the XX anywhere and target XX is

million so will we losses offset will from that of And the like months, to we have be next more enough and over to those we that, XX contractual SASSA. believe that to the than XX would X target


much, WEDGE Capital [Operator Management. very John Flynn sir. next comes you question Thank Instructions] The of from

John Flynn

on question quick for a you had KSNET. Just

the quite So more bit that comments regulations. means? has you The mentioned towards in you But, fallen end will clarity on with a use stabilize believe a what forward. I year KSNET this and could in guess, bit changes calendar going the profitability your we of the that

you months the a the business -- can are earnings current the that will there margins over of structure or stabilized that higher happen when of or to say of cost at a than next is will and you the normalization nine thinking KSNET? So stabilize, level lead perhaps level

Herman Kotzé

that stabilize of where view, come growth. Thanks, all, a That's top we significant side we We the When from the of substantially. volume a need question. what's to at would of price revenue when has John. we've It's component we line. the the - first with markets because first the stabilizing the the - impact, of look the down pricing Korean obviously seen supplement happened regulatory fairly business, point biggest like multifaceted simply South to in

we least show that's that we first volumes because And to top So over that able numbers we in single-digit than we services other and of the focus the fiscal to fiscal if year, look at XXXX, for will some that, increase that's be low point really us. line, hope pricing. we believe provide. growth our at secondary next an the to increase on expand on core rather the an Also

is service, our payment business. in addition to banking - and service which EFT that, or our gateway direct VAN mainly a So really

companies view, the focus will lag how into There as tax be extent stabilization cut the card that are the X a the the and discussion. my to That issuing profit and there what a of is every mainly will place us. the and, government or discussions Korea, point determine one delay top in are really between marginal passed VAN of various banks. They of is line. ones various to in by increase be separate to really taking operating and terms the those the a determined after outcome EBITDA that major be, will down who profit for currently So issuers first are and announced small a the by in that's negotiation lines. There translates in the on fees obviously,

the that leg in of SME other we of on other the is major unlike this, KSNET the large focus because is quite Korea, course, markets. than The VAN companies more market South retail

We merchants, are who of terminals, the various for quite agents, SME the dependent et on. of so on responsible the the servicing use cetera, are maintenance and

of or negotiations we in issuers the And a be to do focus get is numbers that lag That now, completed, be a accustomed as when we main also the six that maintain fees I expect line pushing so will of growth reduction sure the period, at the at there point lag us top months. well. from been we maintain this to. to but But down terms and to into It's to all after volumes tax unclear bit some there terms exactly that in in of the in probably our share to time, [plating] around those agents. is as EBITDA we've that I estimate for market make profit from just growth a

John Flynn

few there. bit view XX more to been on more and could MobiKwik, develop how progressing use XX just delays for clarity mentioned, There And you this India, a how information so you. next as Thank with Okay. MobiKwik. months hiccups, quickly you you on the just has to just anticipate on some a

Herman Kotzé

really issues come let multiple very is relationship contend from quite in is do perspective, payments in will our as we Dhruv on head one well to plan the just here. I the with government MobiKwik obviously closely to are my active Sure. space. There them. But has involved for in with always, The Dhruv there Dhruv what is with. and that are India. India

before. time, to digital something regluation new is time new from wallets, certain that of example, lot an which in KYC with coming there a wasn't do, having have as We so for to requirements around

the to on But Android can views this two about think that the over a Dhruv, just it's going which overall, both volume big been you is finally, and contend interoperable of your contend to growth us weeks been iOS But we quite also I common in for developed could has VCC and the going by Obviously, now platforms, so, forward see with. that's you for give where the there's but the launch, next a encouraging. going. So year wallet or testing milestone only us. rate with. already uptake maybe been MobiKwik government There's have with

Dhruv Chopra


to we the the we've and obviously, live, client got the So, project anticipation base. penetration continue within the now MobiKwik is that increase will

The revenue looking you're deployment VCC potentially a of model transaction fees. runway the combination So customers millions on at specific for fees license a of time. over is and of

continue we're of But the potential will work And that with more that. formally and opportunities we to to MobiKwik India as with in look we've at India months. that out we MobiKwik we outside would So as products at are we're contractually looking on kind projects some strategy. that specifically, do next to we broadly, roll agreement them UEPS the side, of we continue part over figure MobiKwik wasn't out with evaluating particularly so the got and which of XX more that,

of a running of the us other get get than up being So and some get going, lot going. it it's to to this while work them taken ramped a up us toward ones. lot hope with and VCC the first project We to took sooner done a

John Flynn

you. Okay. Thank


Woodmont. comes next The Will Instructions] [Operator question from of Settle

Will Settle

Yes, just questions follow up KSNET earlier. the to to wanted

'XX the of So, in to and guess just value that in remains whereas December your $XX with is Investor a I is what of a million-or-so. level highlighting regulations, to fiscal mean, I Day, you new pretty you to be returning that the in back future as environment seen, kind as highlighted pinpoint potentiality we a you're and level or and seem KSNET, attaching to of the kind number hesitant that EBITDA a it?

Herman Kotzé

of to level Yes. certainly return wanted We profitability. that

most volume is a profitability, us, on to priority But That happening of number. XXXX, monthly of fiscal through for as us we way developments. to we've companies probably regain right? things, take the can due it increasing as being I've first that it think, of will combination squeezed VAN by out get these is, run-rate back on an can to X we I side. basis that ensure absolute of a see the market what lost The to the smaller are indicated,

Korean is space. second, market Gateway in the increased course, marketing The highly of and our of and as uptake It direct EFT products. is well Payment competitive a the

competitors. you can imagine, the services those as online or a use cost some lot Payment below our Gateway of Korean So of by payment an Most make of of cost actually have services, offered of them marketplace. Gateway are retailers and at most

which notable we've introduced the that we And So very services, to. over that's year need product a to something facility. the capital the of think the introduction through working or and always new products last aware finance thing most so, of alive and be third is, targeted, focused I very is

quite -- their obviously in just small in businesses, processing facility we tremendous we value primarily more stock. a also to XX than and a keen market expand of or believe is are more lot an buy deal retailers, So side or profitable the XXX,XXX we to can area where have to is business. amount a access them XX again, a This and pure the of add we've the got to SME because with most of Korea, South XX-day

back combination EBITDA the our things, level sort levels we through million X of months. XX So of $XX million, the those a hope next within to to bring $XX

Dhruv Chopra

is This Dhruv.

than on out close to Just point.

to-high KSNET. to margin XX% mid- we be So used at EBITDA on

But EBITDA has mid-XX% think an where back pointed basis, low- cut reasons new So get a is out the we on margin. as can pricing with I to the we were. absolute to the Herman probably probably normal,


Great. very was Thank the you for X Thank us. gentlemen. behalf this much That of On concludes conference. joining final question. that you Net afternoon's

disconnect now may your lines. You