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Net1 reputation ‘tarnished’

Companies

Johannesburg – Net1 UEPS Technologies says its reputation has been tarnished by “frivolous public attacks”.

This statement is contained in its results for the three months to end March, published on Friday.

In this statement to shareholders, the company notes its earnings for the third quarter were affected by the issue of 15 million more shares, which was partially offset by it buying back 5.5 million shares.

It also benefited from the weaker dollar, and a growth in its lending and insurance business.

Revenue was 10 percent higher in dollar terms at $148 million, while earnings per share came in flat at 0.43USc.

In the statement, CEO Serge Belamant notes the “last few months have been challenging, aggravated by the tarnishing of our reputation and questioning of our business practices due to frivolous and unsubstantiated public attacks”.

Belamant was both CEO and chairman until the company’s board split those roles following an improvement to its governance structure.

That followed it coming under attack after the South African Social Security agency wanted to extend a R10 billion deal with it to provide welfare payments to 17 million South African beneficiaries.

Eventually, the Constitutional Court ruled that the deal could be extended for a year, but under close supervision, and a new tender had to be implemented thereafter. Net1’s lending practices were also queried after allegations were made that a subsidiary was lending money to social grant recipients, and then deducting the amount owed before welfare payments were made.

Read also: Belamant quits as Net1 chairman in role split

Belamant says, “although we devoted a substantial amount of time to manage these issues, we believe that we have made sufficient progress towards the finalisation of our South African and international expansion strategy”.

He adds the distribution of grants in April and May has gone smoothly and without any delay or interruption.

“We continue to fulfil our obligations in accordance with the Constitutional Court's order. We remain willing to support a smooth transition to SASSA or whomever they determine to be the most suitable service provider when our current contract expires. In the interim, we continue to provide seamless and timely access to grants for beneficiaries and our technology continues to save the South African government an estimated R2 billion per annum through the identification and removal of fraudulent beneficiaries," he argues.

Belamant says the company will soon start implementing its plan to accelerate growth, diversification and geographic footprint.

“In South Africa we will partner, invest in or acquire the right institutions to expand our addressable market and fuel innovation, which in turn will lead to the creation of new products and business models.”

Net1, which is buying a stake in Cell C and Blue Label, expects to complete these deals next quarter.

BUSINESS REPORT ONLINE

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