Dhruv Chopra | IR |
Herman Kotzé | CEO |
Alex Smith | CFO |
Allen Klee | Maxim Group |
Good day, ladies and gentlemen, and welcome to the Net 1 UEPS First Quarter 2019 Earnings Conference. All participants are currently in listen-only mode. [Operator Instructions] Please also note that this call is being recorded. I'd now like to turn the conference over to Dhruv Chopra. Please go ahead, sir.
Chris. you, Thank first our earnings call. Welcome quarter to XXXX is me Smith. Kotzé; Herman the today on call our and CEO, With our CFO, Alex
press ir.netX.com. supplementary our a release are Our on available financial Investor presentation website, Relations and
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We will remarks. have a prepared question-and-answer our following session
turn over that, call to let with me Herman. So the
X, shareholders. Good Thank expiration morning Dhruv. to the on following contract X, for of Post you, a XX of our the the Africa or with Office to our new the and transition Net SASSA SAPO. dawn October XXXX September all South marked
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September million debt or of we facilities. XX, As XXXX, outstanding of million $XX under our ZARXXX term long African had South
of repayments that during XXXX We fiscal expect in of during remainder will ZARXX of further equal the June and three principal make remainder fiscal the ZARXXX.X XXXX. three in to million million repayments totaling be full XXXX, settled
$XX.X quarter $X.X first million tax compared to expense million was in XXXX Our XXXX.
losses tax tax asset effective XXXX the to has by not Our losses. impacted significantly been benefit recorded incurred for rate effectively CPS, the a we’ve first by deferred quarter as operating of these related net
rate non-deductible rate XXXX, South higher transaction African long items facility, rate XX.X%, incurred, the expenses. continue special a the $XX.X have which around expect was $X.X million XX%. expenditures quarter interest tax African excluding effective and the Excluding on our the we result would term been the to million for our in Including losses than CPS statutory effective of related of South to as non-deductible be for
of million of quarter million count actual our XX.X the first for count versus XX share share XXXX September weighted was Our XX.X shares.
between inclusion inclusion our and Of $X.XX underestimated Turning to we to reduction weaker The the our of ATM infrastructure. down, African related the EPE very are the expected guidance guidance, the split to to have cost our relates balance guidance, our funding on and effect the quarter lower disappointed in as we and our base revise impact on financial performance South in first than products. account $X.XX have our businesses. to the IPG has had would in relates the that members that our transition businesses, respect the of equally financial this customer
earnings assumptions fundamental per the revised on Our share following based and is performance. guidance
CPS from in XXXX. Firstly, income no contribution to fiscal net
Treasury eliminate in that quarter in which will recommendation, have during will constitutional the termination year, issue first the the losses by awaiting pricing fiscal We the court with seen in this the incurred be line resolved the effectively CPS.
caused X.XX from Secondly, of EPE targeting. by a new remainder the is a guidance million. of grant average This XXX,XXX prior is reducing activities largely month due the from XX,XXX accounts conditions were signup This for active we facing expected rate the EPE year down X.X accounts of revision our million, month to previously to the are XXX,XXX of of beneficiaries. we reflection the with difficult SASSA’s of a
EPE currency in of rate of we base consistent synergies with Korea to and half around accounts tax dependent accounts. of to growth quarter. X.XX expected DNI XX.X year. average although, remaining South Thirdly, these approximately reflecting results of significant improvements although XX%. in with that of successfully our on potential financial fiscal strategy ability for the see the we our And X EPE on Fourthly, XXXX This be half ZARXX.XX results the businesses. see million new ARPU year. of to is other fiscal a acquiring expect million we finally, our shares XXXX, XX% is are should acquiring develop dollar, and guidance full Fifthly, our at customers the of constant last the our inclusion strategy, The following the the setbacks second the our months fiscal a year approximately
to other to fiscal success that around year to DNI over impact. we've Given synergies on headwinds particularly to X prevailing we guidance, growth like months positively improves these a some environment the the and be the the We of the and in to environment, these of XXXX biggest the company's deliver our reiterate of the would transition hope and We our initiatives be have history. next cautious X by view start would been revise and this is to events should created C continuing initiatives, factored an into if to if respect Cell likely the guidance. the clearer able in
all year call investments various this drive expect to and the growth to up the initiatives, and now be of open term for We our base. can We actions fiscal bottom this long Q&A.
Allen of Maxim first question is [Operator from Instructions] Klee Group. Our
down whatever anymore is why maybe what In in you're degree just that and you for And the number the terms you won't you or terms to on go customers this force a then or color give little you little of your explain they're SASSA ATMs a competitively, or area, can to the with happen. business going they EPE to that account acquiring understanding the rural that more, for customers, can us that that transacting customers can feel opening why that that more reason an in grow? is mobile confident that's it actually of
how the a end this question, important base first the and in forward, going August On the post tremendous ensure possible note of SASSA convert customer further see pressure would all, very the push dedicated so court EPE under think quarter, the we of approach that the base. in decline towards first to were many from have office there that first I people it's September to to a of our they the who as to not extension for as and was to account contract
ended, our and further have come of that's beneficiaries, to the SAPO has extent, over contract and hope the bulk of that terms last an customers in transfers of we there SASSA’s EPE in including are to accounts to trying have that active extension obligations that end we that an activities and number that obviously stabilization months. receive a also Now we've to do the the seen EPE to two And that no banks. is grants end brought
indication. So very that's a I good think
those a way forms. accounts. process that their the forms see followed. of There That reopen account so has paid to we want ramifications for want in Office an being account in The almost other and processing significant that from being the or that is choice. unwillingness is indication side, positive Annexure now some people those processing C we legal and they process processed opting SASSA to an is when that account they have EPE now any EPE to forms don't backlog or they That intervention are Post so that our with these after very fill are some called are was be into finally accounts want those other forms, forms of and also people EPE changed a
that or the So barring with seen activity the of of we further across. we've end believe unjustified that illegal bulk by SASSA, in beneficiaries mind, any transfer
that We a we updated about that unfortunately strongly In second because XXX,XXX the regard. with question, to it, the resolve and any we contrary joy beneficiaries concerned. any are The we relevant is and but to of office, that manner have the answer bank. no. part transfer with is people regulations us amicably is the us. of that available as keep you account us bank whether that's network but taking much and can’t or about acts, obviously in was the African South but much to in the a as opening subjugate, network with action asked far acquiring related say whether your holder you The legal whether acquiring whether believe obviously tried we is post of We they bank accounts with as bank they to as they short we’ll didn't could, that done
may South today, ATMs infrastructure fixed I areas low. rural banks quite these roll to in rural The other except of area obviously the for mobile, inherent maintain prevalence our run to the ATMs, locations the networks. security isn't nobody ATM distribution in is deploys us. ATMs and volume and whether people. for There are mobile a specifically in the large really expensive operators and in and Africa ATM prevalence specifically of risks a add there in where out So quite of or that guaranteed is fixed It environment
network, and we've And so, point and the which this our through being ATM established time fixed about crown in a ATMs. jewel unique our we obviously very infrastructure number mobile is at then valuable XXXX believe
ruggedized with in these we to great and in that accessing need we pickup accordance accessing services. determine know They affixed where the out send So are those robust that to a have a people people back trucks. are of the are and and is cash we difficulty ATMs where on very service financial roster
withdraw they have want money terms today So, people recipients. their of grant and a how choice to they are these in of most
they the month. is So typically the would a would the quite prohibitive post a most because where at to They them that a to long money didn't waiting the typically over distances to counter involved they capacity the have X of hour of lot choice, cost office X The the closest there's ATM. their the and only first times or or of people very have on either access cases. travel because payments, one is inevitably to would they in queues town because town talking immediately, a X office and want bank post day have are there the if a we’re only grant receive travel with in assist be or to about ATM X of of invariably
account, our people us present convert one for and cards can an give their EPE ATMs the receive other The necessarily can that cash and more still to are people they EPE have. mobile that alternative ATMs can draw EPE for their from account’s our simply to That money. ATMs it at fee to their they mean arrive account we them holders at holders they accounts their option fully now those that our that's but and structure our than that will our withdraw attractive doesn't they to interoperable have come So and obviously is account the for ATMs that cash when makes we ATMs.
our cost it's end, a It’s in is our the anybody if travel network. value in a you the And to costs lot cheaper factor proposition so, more and that what for and of nutshell, convenient access of in just is. the time,
given and the business newer the market for of addressable over this of post the, for is kind the with accounts, So rural what you how that total office to in think also the first EPE then -- areas. the the do have like transferred ones for
So rural in the I bank and larger areas us the and think post city areas. ATMs the Again, much in towns. opportunity opportunity obviously the for greater the or in much offices specifically market larger concentrated are very is the
to intense. in remains And to there so of end a monthly that use X is are X million with issued more whether people they whether the potential probably are the the we on will in customers of a number We where I’ve of we take competition, the so X north remarks combination XX XXXX. now, blended in unbanked, they customers, areas, just urban for need rural a bank said, still to target customers, fiscal account, proposition, roughly much million our us, urban believe value underbanked to be able around is mentioned the that is some as market million. in share areas But of and as EPE our key as or and in are our get million believe my who basis EPE towards but the well, prepared for infrastructure opportunity pricing areas, I
outlook the if move then KSNET, a holiday, of is but process, change so you issue just we how the in cross down there still on you this that and bringing to timing your of of grow to you've – to a trying And how was to process been said or that just improve, of business? feel that the can agents business the kind your that is this
Sure.
is there depressed which mismatch slightly the year, period the why revenues Last and year, that would bit in this say. was this Thanksgiving there the QX, so a timing So I year, we holidays quarter. explains typically of the holidays, of in -- during of a one is specific had Korean biggest biggest the QX were
those underway. terms expenses on at to of our efforts we pay that agent In dedicated workforce, there are KSNET through our commissions look factors cost and the that project is rather or mainly a underlying within driven our
of quality give initial last busy an overhaul, need our more the when than will or of around more engaged overview agents. our not firm. in time, also rather note renew to we that to an a top relates that the got that of global decrease Over we from months the details line, with these evident, of of so, because we agents that results the but are from contract important translate not on deployed. the business it's that are mean become And consulting services into the after the have may of but some contracts important cut with quantity will place sustainable turn fee the the think government. a deployed that agents. three intense We'll in line, model specifically That Over in certain line to simply as well of believe we increase focus specific perspective, the I an a to on use the we revenue definitely the agents in these bottom we we it it's that the result
very dedicated effort So a underway. there's
that forward to trough anniversarying the week VAN that to of take really we the we fee government. seen positive and We will the this the we've now next that cut by are again imposed cuts begin last get the were effect the of are of
from question is [indiscernible]. next Our
in product, will it providing envisage exactly to to you a Do offering having your discounted then customers? any your that EPE provide telecoms and you shareholder term further how to EPE support to going and over the to is mentioned near C Cell look on customers, product be
the primarily On refinancing and the Blue date first question, and obviously be along last support with we've refinanced consortium cash any Label commenced of shareholders, it relevant are. on nature. in case, South of And the We the there To ZARX.X that It a the a recently other a we believe, middle and the ongoing further restructuring monitoring know, temporary the the will nature recapitalization if as be C. so our material In and to process. will in meantime, C with Cell in support They its provide made that cost when not is C you I required dedicated provided initial investment with has African date carefully banks. is in the of currently, extent of focus bit. Cell flow year. reducing recapitalization on the of -- implications Cell
recapitalization the view, master our that, it’s if well plan well terms the but in and Cell consider underway obviously under and will at refinancing, in C We control. are of
products of we that the look data would being well your that I customers, instances and and we’ve components obviously or at as of it in the terms certain is are have launched the the into is you various to our part In a you of and of second EPE competitive But when looking demographics are designing fairly for what give is the normally airtime, obviously, idea finance market. EPE address percipient, rather for question, that, customer of some you on if to spend away as is too say of product typical to we much a who handset. of target good want we our don't needs we have way what social we information. the to core communication grant a what do by And the a the look income the break also disposable at certain and cost them
year find of period replace As as lot move handset obviously well. we there's X X the and or people a obviously that need after the smartphones to a towards a
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Our next a question from is Klee. follow-up Allen
the about was of of think the together is see what could from a opportunity of IPG? up following what restructuring Just and of the you then what go be pieces it over can the kind the term contribution talking you're combining different IPG the abilities of different cost you longer your you the little once restructuring, on and
Sure.
cost two separately. out So is, that of the and given factors. we restructuring, broken costs think, terms that by the major in I of haven't It driven mainly
which that had sizing nature. a regard, we and that was of retrenchment be costs in include so first staff to are component obviously certain the they The one-off right in
the run office our emoney we chose our and of have hold we in have office some Malta that second terms contracts based to terms The around -- reconciliation, those is because had an because the is good. management done also license some compliance of that and that risk optimized EU of substantially means, Once in you and restructuring early what to and had itself quality various we of of the and we we of and then just largely the have and out we give I was chose that operations we those cost support implication. done very infrastructure there, settlement, we terminate terminate in color is it way maybe cheaper obvious a if more bit this an operated Malta all reorganization the and is is Malta, find can staff all now
Malta operational And so going European our and office, recon from forward, our will we settlement drive aspects.
itself the company or an officer, requires the amount money have be, having in good that Brexit license a in of nonetheless, in negotiations have office London UK of license and because emoney and laundering a a we small be to a also an But asset. depending risk minimum We valuable license will CFO. outcome the holder obviously emoney have a the staff CEO quite on a what members, could and a including officer the
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fully that that can will you And able down. you'd would do then when your back that have for debt an paid buy have to timing you clarify your you and South in ability for imply be that And to just believe so when stock? you prepay Africa,
We June can’t terms debt. only be bulk going payments penalties. in end of it segment payments prepay restrictions The got the basically of smaller will by No are the million three and the The settled we've of XXXX. debt, about there of forward. of XXX then
a by cash, to terms it of be that So to, we I'd end restrictions the year, this be think in the lifted. fiscal position we would in of like
I more, is Visa have MobiKwik, -- of makes could discussing type what there you change one in explain then have? just What of with you ask MasterCard valuable? a and little And it were was that you and and they regulation why some that that if more that could one that
So guidelines about weeks three wallet, four Central of number a for the or the issued new do ago, which things. digital Bank
directly central one bank Rupay bank the without and through methods important between the first, it second where does wallets issuing looking accounts the most things Visa -- issuing today and banks to and it necessarily locally issuers to through to interoperability wallets makes has two card a is is partner. is wallet typically having and digital bank the permitted The become MasterCard
So manage going we by see, got CBCC you on with of constrained users in because because want merger. their because risk through own add been case, as by we've set we've the they're can rollout, the they to can limitations our number bank that
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maybe just in, No dial we wait to Well, he I complete what can for was while Dhruv saying. problem. back
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us is account in the bigger which to Visa is from access forward now. issuance card, our bigger card, much virtual specifically way a perspective So much Net of India and obviously the of a X range for a of in numbers having terms
open forward which a to offering. and the offering market we million for valuable all We will constrained to the card XXX proposition in at subscribers, sell no terms in And are excess quite of us, longer be of product that MobiKwik’s going virtual how can the of is up moment.
conference your you disconnect lines. us Ladies much, that Thank Thank concludes call. may and gentlemen, you sir. for you this and very then now joining